Seems like you can withdraw 1/2 tax free and pay back to yourself. Or are you better off putting your after tax money into a savings account?
" You pay your account back the balance you borrowed, plus any interest (a fixed rate determined at the time of the loan), through after-tax payroll deductions
Loans must be fully repaid through payroll deductions within 60 months unless the loan is used for the purchase of a primary residence (Home Loan). Loans used for the purchase of a primary residence must be repaid within 30 years (360 months).
2006-10-11 04:32:07 · 8 answers · asked by Viceroy of Jello 1 in Business & Finance ➔ Renting & Real Estate
No, keep the two separate
2006-10-11 04:33:16 · answer #1 · answered by Sponge82 1 · 0⤊ 0⤋
Only if you take a loan from your 401k -- and that's only if the plan administrator permits it.
If you take a loan against your 401k, you must immediately repay it IN FULL if you leave the company for any reason. If you don't, you will trigger an early withdrawl event if you are under 59 1/2 years of age. This will be fully taxable and there is a 10% sur-tax for early withdrawls. This will quickly get ugly as additional funds must be withdrawn to cover the mandatory withholding on the withdrawl amount.
2006-10-11 06:33:14 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Why save for a down payment at all? With interest rates as low as they are, if you have really good credit, you're probably better off just borrowing 100% on the property you want to purchase or build. It'll take you a long time to pay back your 401K... and you'll be losing potential interest during the pay-back time, anyway. On top of that... you'll be trying to put money back into the 401K at the same time you just took on a new (and probably bigger) mortgage. Just look at all your options. Besides... the house you're buying will appreciate in value as well, so that in itself is another investment, right? Just food for thought...
2006-10-11 04:44:16 · answer #3 · answered by JP 4 · 0⤊ 0⤋
Unfortunately my company doesn't allow deductions on 401k for home loans. You need to be sure you know how this works, the government generally takes a big cut unless your are 59 and 1/2.
2006-10-11 04:35:17 · answer #4 · answered by doktordbel 5 · 0⤊ 0⤋
on the grounds which you're saving and not making an investment you could in basic terms place the income something risk-free and liquid like the funds marketplace account you point out. 401Ks are for making an investment over long term horizons or perhaps nonetheless they have surpassed rules to allow you to tug funds out with out effects to purchase a house that doesn't recommend it rather is a great place to maintain. With an 18 month time horizon you're unlikely to be finding for a great return in basic terms making useful your significant is risk-free.
2016-12-26 16:09:42 · answer #5 · answered by ? 3 · 0⤊ 0⤋
normally you can take a withdrawal from your 401k without penalty to purchase a home. The best course of action is to A) check with your human resources benefit department B) then check with the plan administrator
2006-10-11 04:42:21 · answer #6 · answered by Keary 3 · 0⤊ 1⤋
401K's are for long term retirement saving. Using them for short term goals such as buying a car or a down payment for a house diminishes your earning potential in that 401K; however, lots of people make that mistake. You should have several savings accounts for short term goals such as vacations, Christmas, and for your down payment. Make a timeline for your saving and soon you should reach your goal as long as you stick to your plan. You will feel better about it and your 401K goes untouched.
2006-10-11 04:50:59 · answer #7 · answered by COURTNEY R 2 · 0⤊ 0⤋
With most 401k's purchaseing your primary residence you don't have to payback. Check with your 401k adminstator
2006-10-11 04:38:37 · answer #8 · answered by agentphoto 1 · 0⤊ 1⤋