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Old 04-25-2010, 08:42 AM
 
27 posts, read 66,725 times
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My employer is being bought out. I have been told that my choices for my 401K are to move my money to the new employer's 401K or to an IRA.

I am also hoping to buy a house later in 2010. It looks like I can withdraw $10,000 from an IRA as an early IRA withdrawal for a house since I am a first time home buyer.

I am unclear about the whether I can do this all in the same year, though.

From what I can tell, I can't open a Roth IRA then do the early IRA withdrawal for a house. You must have had the money in the Roth IRA for 5 years in order to not have a penalty upon withdrawal.

What about a traditional IRA? I haven't found any time limits on how long you must have the money in the traditional IRA before taking the first home purchase withdrawal.

Also, I would be splitting my old 401K ($10,000 to traditional IRA and balance to new 401K). I am assuming that doesn't have any tax complications.
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Old 04-25-2010, 03:25 PM
 
Location: Skokiewood
732 posts, read 2,677,080 times
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You should be able to roll the 401(k) to an IRA then do the first time home buyer withdrawal within a single year. There's no time limit for the withdrawal on the traditional IRA like there is on the Roth because the traditional IRA withdrawal would still be subject to income tax (you don't pay the 10% penalty tax because it's for first time home purchase). Splitting the 401(k) rollover shouldn't matter from a tax standpoint.
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Old 04-28-2010, 10:01 PM
 
3 posts, read 13,900 times
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see a reputable financial professonal to look at your whole piciture to see where its best to get the money from for the house. You should Roll your 401k into an IRA, it is much better to have more choices and be in control than have all your retirment eggs in one basket. How much is in the IRA, these are all important questions. How old are you. How much longer will you be working. I would on the other hand see what the bank loan rates are for long term, it might be better to use more of thier money and let your money grow tax free in a roth...? Again, you need the whole picture of your finances, not just one tidbit.
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Old 04-29-2010, 08:32 AM
 
Location: Houston
529 posts, read 1,167,498 times
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An IRA will give you access to more investment opportunities, although if you like to invest in index funds there's not much difference from a 401K.

One thing to take in consideration, probably among many
Let's say your income is above the limits for make IRA tax deductible contributions or Roth IRA contributions but you want to take advantage of the T-IRA to Roth IRA conversion limit removals.
You deposit $5K (after tax) in a traditional IRA and you convert only this amount
If you rolled over your 401K before the previous conversion in a separate T-IRA you'll have to pay taxes on gains anyway on a part of your rolled over amount.
If you believe you can somehow offset the taxes with deductions, it might be a good idea to roll it over to a T-IRA and do an immediate conversion to a Roth IRA. Take in consideration that Dubya's tax cuts are going to be gone next year so it might be a good idea to do it now than later, if the tax cuts favored you.
It finally depends on you and your finances.
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Old 04-21-2011, 03:14 PM
 
1 posts, read 7,555 times
Reputation: 13
A friend rolled over part of her retirement fund upon retirement (About $30,000) into another IRA , and used the balance to buy a first home in Florida. She was told by the bank officer that she could do this as long as she used the balance to purchase real estate. This was in 2008 when she moved to Florida.
This was a first home purchase in her name. She received a notice from the IRS TWO YEARS LATER, saying that she had to pay $25,000 tax, including interest and penalties. She is distraught, since she is living on basically Social Security and not much else. She cannot pay it, and the interest keeps running!! I understand there is a first home exemption clause. We need an immediate answer.
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Old 04-21-2011, 03:20 PM
 
Location: Stephenville, Texas
957 posts, read 1,446,201 times
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Quote:
Originally Posted by V Rogers View Post
A friend rolled over part of her retirement fund upon retirement (About $30,000) into another IRA , and used the balance to buy a first home in Florida. She was told by the bank officer that she could do this as long as she used the balance to purchase real estate. This was in 2008 when she moved to Florida.
This was a first home purchase in her name. She received a notice from the IRS TWO YEARS LATER, saying that she had to pay $25,000 tax, including interest and penalties. She is distraught, since she is living on basically Social Security and not much else. She cannot pay it, and the interest keeps running!! I understand there is a first home exemption clause. We need an immediate answer.

Bank officers aren't what I'd consider a reliable source on giving out financial advice. This situation points that out. I would get advice from a tax attorney, but I don't think there is any way it can be redone...the tax is due.
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