I have about (mumble) dollars in a 401(k) plan with a very good investment house. Zero of them are in the stock market as of a couple of days ago. That's how much upside potential I see in the stock market near-term. The tax penalty being what it is, the next-best alternative to pulling it out to pay off debt* is to leave my money in investment-grade bond funds.
*We ran the numbers. It's within a couple hundred dollars of a dead wash, paying off debt as scheduled, versus cashing in this retirement account and using it to pay down debt. We still might pull it out yet, depending on what the economy does going forward.
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