Tap your 401(k) to buy high-yield CDs?

USA Today - Harold Evensky, a personal financial planning professor at Texas Tech, answers a reader's question about retirement.

Q: I am 60 years old and my spouse is 55. I have about $300,000 in my 401(k), and my spouse has about $335,000. We both have military pensions and have earned income of $90,000 per year. Since I can withdraw money from my 401(k), is it wise to withdraw money to buy high-yield certificates of deposit? Merlina To, Westminster Md.

A: Without knowing more about your cash-flow needs, it's impossible to determine if any fixed-income investment is appropriate, says Harold Evensky, chairman of Evensky & Katz/Foldes Financial Wealth Management in Coral Gables, Fla.

However, assuming a short-term fixed-income allocation is appropriate, don't withdraw funds from your 401(k). "Losing the benefit of a 10- to 15-year 401(k) tax-deferred shelter will not be made up by investing in currently taxable high-yield CDs, says Evensky, who is also a professor of practice at Texas Tech University in Lubbock, Texas.

Read the rest of Harold's answer.