Retirement fund. Xfering to savings for a year. Good idea?

I'm old enough to not be penalized. The tax is 20 percent. The fund is not that much. It really wouldn't augment my social security much. But, I've seen friends have their's seriously wiped out. I tend to not trust anything to do with the market anymore.

Yeah, the tax is taken out by Fidelity right off the bat. At 59 or 60 the penalty no longer applies. I know very little about it also. I have some home improvements I need to do before I can sell my house for what I want. I'll probably use part of it for that. If the house sells well and the market looks stable enough, I'll put back in what I take out and then some. The tax is a lot. But, losing the money on the market would be a lot more.

I also have an IRA with Fidelity...they offer more than just stock and bonds....I have a portion in a cash fund....not making much, less than 1%.

A 20% tax hit is a pretty big hit....

If you don't like the risk associated with stocks, then you could have them transfer it to a cash fund....or, one of the other 1500+ funds they offer....

Frankly, I'd talk to a professional.....before I did anything.

Trying to time the market is a losing strategy over the long haul. The real issue is as Ben identified, your time horizon. If the market tanked tomorrow then how much time do you have to allow it to recover? If you need those funds for living expenses in the short term and would have to be cashing out at a market low then they shouldn't be in stocks right now anyway, regardless of any short-term bullish or bearish sentiment. If you have a longer time horizon but are uncomfortable with your asset balance then you can transfer the assets from one protected retirement investment to another without penalty or tax. You can switch it to dividend stocks, bonds, Treasuries, gold, real estate, pretty much whatever you want. Even a money market, which is essentially cash. Fidelity can help you find assets you like and do that penalty- and tax-free.

But actually, the most important word of advice you need here is -- don't get your financial advice from a backpacking forum...

I have an agreement with my accountant. I do not ask her backpacking advice and I do not give accounting advice.

Ask someone who does tax and retirement planning for a living and is licensed/certified.

A couple of things I would consider in your shoes.

- There's a 20% penalty for withdrawing early.  The amount also gets reported as income, so you will pay income tax on it on top of the penalty.  You *may* earn 1% in a savings account in the bank which, again, is subject to income tax.  So, let's say you're in the 15% tax bracket.  That means your retirement fund in Fidelity could lose 35% in value outright and still do just as well as your put-it-in-the-bank idea.

- There are probably fund options in your account that are not stocks.  I'm guessing there are guaranteed rate funds you can move your investment into which will pay a much higher interest than a bank savings account.

- Once you've taken your money out of the retirement account, you can't just put it back after a year.  There are limits and constraints to doing that.