Can I Use My 401k to Buy a House?

Can I use my 401k to buy a house? You can rolloverrepayment payable for the tax year when you submit
an IRA from one policy to another during any period,your tax return. Some 401k penalty free exit
however if you are a casualty of redundancy, or areinconsistencies are here (refer to our disclosure at the
considering moving positions or about to retire, inbottom of this page).
addition to thinking of rolling over or considering-Do nothing and leave it with your former company as
withdrawal of money from your 401k policy, then youlong as the sum is larger than $5,000. Totals smaller
have a number of choices pivoting on your currentthan $5,000 will generally be given out to you, minus a
age, and providing you no longer work for the20 per cent withholding tax, regardless of you age.
company providing the original 401k policy. You could-Conduct what is known as a '401k rollover' into an
therefore conceivably purchase a property with yourIRA or a 'solo' 401k
401K proceeds but there are however some caveatsYour 401k withdrawal alternatives over the age of
which pivot entirely upon your age at the time you70.5 years
wish to cash in to purchase your house.-Acquire a lump sum payment, in which occasion your
Given the reliance on the ages of the holders of the401k plan supplier will write you a check for the worth
401K contracts below is a list of choices which areof your policy minus a 20 per cent withholding tax
available to you should you wish to release funds heldenforced by the IRS. The 20 per cent tax that is held
within the policy.back will be included against your income tax owed or
Your 401k withdrawal alternatives over the age ofwill be included towards any repayment owed for the
59.5 but before you attain 70.5 years of age;tax year when you submit your tax return.
-Acquire a lump sum payment, on this occasion your-Leave it with your company 401k policy but begin
401k plan supplier will write you a check or depositobtaining the desired minimum payment.
funds electronically for the price of your account minus-You can take no actions and leave it with your
a 20 per cent withholding taxenforced by the IRS. Theformer company as long as the sum is larger than
20 per cent tax that is held back will be included$5,000. In this occurrence, you will be charged 50% of
against your income tax due or will be included withthe desired minimum payment. Totals smaller than
respect to any repayment owed for the tax year$5,000 will typically be given out to you regardless of
when you submit your tax return.you age.
-Do nothing, you can leave accumulated values with-Conduct what is known as a '401k rollover' into an
your former employer as long as the sum is largerIRA or a 'solo' 401k - you even so have to obtain the
than $5,000. Totals smaller than $5,000 will normally bedesired minimum payment in spite of the fact you
given out to you regardless of you age.have rolled it over to an IRA.
-Rollover into an IRA or a 'solo' 401k.As you will have noted it is more than possible to use
Your 401k withdrawal alternatives under the age ofmy 401k to buy a house but it will certainly hinge upon
59.5 years;your circumstances at the time. It is for this reason
-Obtain a lump sum payment, on this occasion yourwhy the above assistance is provided for illustrative
401k plan supplier will provide you with a check orpurposes only and cannot be construed in any way to
electronic funds transfer for the value of your planbe advice. Any financial commitment and the release
minus a 20 per cent withholding tax enforced by theof such funds for (house purchases for example) is a
IRS, in addition to a 10 per cent exit penalty. The 20 pervery important part of the retirement process and
cent tax that is held back, but importantly NOT the 10should not be taken lightly.
per cent penalty, will be included against your incomeFull, frank and impartial financial advice should be
tax owed or will be considered towards anysought before undertaking anything explained above.