Hey everyone, welcome back to Finance Friday.

It's another special edition of Money Girl where I answer your burning money questions.

Today, we have a great topic from an anonymous voicemail caller.

Hi, Laura. I am a government contractor and actually in the process of being laid off

due to some cuts. Once I'm laid off, I'm not quite sure what to do with my 401k. I have about

$30,000, I think, invested right now.

But I have about $5,000 worth of bad debt.

So credit card debt, some medical bills.

So I'm wondering if I should use a portion of my 401K before rolling it over into a new 401k

account to pay off that debt.

I do know that I could be charged up to, I think, a 10% fee.

I'm not quite sure if it's not,

or if it's a good opportunity,

just go ahead and get that debt paid off

and kind of start anew, especially

going into, you know, into a job, potentially in your industry that, you know, government

contracting is the mess right now. But I would love your thought. And thank you in advance.

Anonymous caller, that's a great question, and I really appreciate you leaving the message. If you have a workplace

retirement plan, like a 401k or 403B, there may be times when you're tempted to make an early

withdrawal. An early is defined as being younger than 59.5. For whatever reason, that is the

official retirement age that the IRS has said

is the point where you are going to pay a penalty if you make a withdrawal before that age.

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