401K

Can I use my 401k to buy a house? You can rollover an IRA from one policy to another during any period, however if you are a casualty of redundancy, or are considering moving positions or about to retire, in addition to thinking of rolling over or considering withdrawal of money from your 401k policy, then you have a number of choices pivoting on your current age, and providing you no longer work for the company providing the original 401k policy. You could therefore conceivably purchase a property with your 401K proceeds but there are however some caveats which pivot entirely upon your age at the time you wish to cash in to purchase your house.

Given the reliance on the ages of the holders of the 401K contracts below is a list of choices which are available to you should you wish to release funds held within the policy.

Your 401k withdrawal alternatives over the age of 59.5 but before you attain 70.5 years of age;

-Acquire a lump sum payment, on this occasion your 401k plan supplier will write you a check or deposit funds electronically for the price of your account minus a 20 per cent withholding tax

enforced by the IRS. The 20 per cent tax that is held back will be included against your income tax due or will be included with respect to any repayment owed for the tax year when you submit your tax return.

-Do nothing, you can leave accumulated values with your former employer as long as the sum is larger than $5,000. Totals smaller than $5,000 will normally be given out to you regardless of you age.

-Rollover into an IRA or a ’solo’ 401k.

Your 401k withdrawal alternatives under the age of 59.5 years;

-Obtain a lump sum payment, on this occasion your 401k plan supplier will provide you with a check or electronic funds transfer for the value of your plan minus a 20 per cent withholding tax enforced by the IRS, in addition to a 10 per cent exit penalty. The 20 per cent tax that is held back, but importantly NOT the 10 per cent penalty, will be included against your income tax owed or will be considered towards any repayment payable for the tax year when you submit your tax return. Some 401k penalty free exit inconsistencies are here (refer to our disclosure at the bottom of this page).

-Do nothing and leave it with your former company as long as the sum is larger than $5,000. Totals smaller than $5,000 will generally be given out to you, minus a 20 per cent withholding tax, regardless of you age.

-Conduct what is known as a ‘401k rollover’ into an IRA or a ’solo’ 401k

Your 401k withdrawal alternatives over the age of 70.5 years

-Acquire a lump sum payment, in which occasion your 401k plan supplier will write you a check for the worth of your policy minus a 20 per cent withholding tax enforced by the IRS. The 20 per cent tax that is held back will be included against your income tax owed or will be included towards any repayment owed for the tax year when you submit your tax return.

-Leave it with your company 401k policy but begin obtaining the desired minimum payment.

-You can take no actions and leave it with your former company as long as the sum is larger than $5,000. In this occurrence, you will be charged 50% of the desired minimum payment. Totals smaller than $5,000 will typically be given out to you regardless of you age.

-Conduct what is known as a ‘401k rollover’ into an IRA or a ’solo’ 401k - you even so have to obtain the desired minimum payment in spite of the fact you have rolled it over to an IRA.

As you will have noted it is more than possible to use my 401k to buy a house but it will certainly hinge upon your circumstances at the time. It is for this reason why the above assistance is provided for illustrative purposes only and cannot be construed in any way to be advice. Any financial commitment and the release of such funds for (house purchases for example) is a very important part of the retirement process and should not be taken lightly.

Full, frank and impartial financial advice should be sought before undertaking anything explained above.

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Author: Jonathan Grigson