Hi friends, thanks for downloading the Money Girl Podcast.

I'm Laura Adams, the author of Money Girl's Smart Moves to Grow Rich.

Get the Paperback or E-book from your favorite bookstore.

A podcast listener named Amy asks, I'm in my late 20's and already have about $20,000 in credit

card debt. I only have 2,000 in savings, but my 401k has over 20,000.

Should I use my retirement funds to pay off my credit cards?

If you have money sitting in a retirement account, it can be awfully tempting to spend it.

I'll cover what you need to know about dipping into retirement

savings and whether using it for credit card debt is a smart move.

Different types of retirement accounts have different rules for taking withdrawals.

Since Amy asked about her 401k, that's the type we'll focus on today.

A 401k is a common type of retirement plan that's offered by many employers.

You elect to have your company deposit a percentage or a flat dollar amount from each paycheck into your 401k

before taxes are taken out.

That's a nice benefit because you don't pay tax

on contributions or their investment earnings until you take distributions in retirement.

For 2012, you can contribute up to $17,000 or up to $22,500 if you're age 50 or older.

Additionally, many employers encourage workers to save

by matching contributions and depositing additional funds into their accounts.

What trips up many people about workplace retirement accounts is that you can't just withdraw money

any time you want, the way you could with a bank savings or a

taxable brokerage account.

...