U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics > Personal Finance
 [Register]
Please register to participate in our discussions with 1.5 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Business Search - 14 Million verified businesses
Search for:  near: 
Reply Start New Thread
 
Old 11-30-2010, 07:49 AM
 
1,091 posts, read 2,005,933 times
Reputation: 582

Advertisements

Considering cashing out 401k to purchase home.......Will not have to pay a 10% charge but was informed will have to pay a percentage on money because it will be considered income........Can anyone clarify this for me.......We are contacting our accountant but was wondering if anyone out there had any advice......
Reply With Quote Quick reply to this message

 
Old 11-30-2010, 07:56 AM
 
20,797 posts, read 34,170,506 times
Reputation: 9950
You can use $10,000 without penalty but you will have to pay TAX on all of what you use. I know this is an available option but it probably isn't the BEST option to buy a home.
Reply With Quote Quick reply to this message
 
Old 11-30-2010, 08:39 AM
 
433 posts, read 696,042 times
Reputation: 219
Quote:
Originally Posted by deeds View Post
Considering cashing out 401k to purchase home.......Will not have to pay a 10% charge but was informed will have to pay a percentage on money because it will be considered income........Can anyone clarify this for me.......We are contacting our accountant but was wondering if anyone out there had any advice......
Anything that comes out of a pre-tax retirement account will add to your income, so that you will be taxed at whatever rate of income tax you have that year.

So if you were to make $ 65,000 BEFORE taking out the money for the home, you would add whatever is taken out to the $ 65,000 to calculate your income.

No 10% penalty though.
Reply With Quote Quick reply to this message
 
Old 11-30-2010, 10:21 AM
 
9,856 posts, read 8,217,654 times
Reputation: 5331
Unless homes are appreciating in your area at a rate higher than the market rate your 401k would earn, and unless you are considering selling your home in the future and banking all profit (rather than using the excess funds to trade up), I can't see how this is a good decision.
Reply With Quote Quick reply to this message
 
Old 11-30-2010, 11:52 AM
 
4,153 posts, read 6,278,645 times
Reputation: 2936
If it's through your job it won't happen. And cashing out your 401k is pretty stupid.
Reply With Quote Quick reply to this message
 
Old 11-30-2010, 12:10 PM
 
Location: West Orange, NJ
12,213 posts, read 9,942,029 times
Reputation: 3413
401k loan should be used as a last result. Is that what you're considering? I'm pretty certain you cannot take money from a 401k early without paying the tax and the 10% penalty.

i'd explore every other option possible first.

also consider, you're pulling money out of your 401k when it's low (selling low), before it has fully recovered from the past 3 years of volotility.
Reply With Quote Quick reply to this message
 
Old 11-30-2010, 03:42 PM
Status: "Hockey season in full swing!!!" (set 13 days ago)
 
Location: Houston, TX
15,955 posts, read 16,545,777 times
Reputation: 14323
401k is for RETIREMENT. Dont cash it in.
Reply With Quote Quick reply to this message
 
Old 12-01-2010, 08:03 AM
 
1,091 posts, read 2,005,933 times
Reputation: 582
Default In a financial bind......Parent took a reverse mtge on home we lived in together my parent passed......

We have enough money in our 401k to pay off house.......This is what we would use the money for.....
Reply With Quote Quick reply to this message
 
Old 12-01-2010, 08:49 AM
 
1,487 posts, read 2,974,924 times
Reputation: 692
Don't do it. Save the money and don't touch your 401K. A house is not an investment and most people then put off paying themselves first so you be behind on your 401K.

Have the money for a downpayment and also emergency funds before buying a home.
Reply With Quote Quick reply to this message
 
Old 12-01-2010, 09:29 PM
 
4,153 posts, read 6,278,645 times
Reputation: 2936
Quote:
Parent took a reverse mtge on home we lived in together my parent passed
Sell home and rent. Problem solved.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $89,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics > Personal Finance
Similar Threads

All times are GMT -6.

2005-2015, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25 - Top