(Closed) Question about using 401k funds to help boost amount for down payment…

posted 7 years ago in Home
Post # 3
Hostess
18643 posts
Honey Beekeeper
  • Wedding: June 2009

Yes it is considered a hardship withdrawal.  But that doesn’t stop you from having to pay income taxes and the 10% penalty.

Seriously think about it before you do it.

Post # 4
Member
14496 posts
Honey Beekeeper
  • Wedding: June 2011

Totally doable.  A coworker of mine did this to buy his first place.  You just pay your account back + interesting I think.

Post # 6
Hostess
18643 posts
Honey Beekeeper
  • Wedding: June 2009

A hardship withdrawal occurs in 6 different situations:

  1. Un-reimbursed medical expenses for you, your spouse, or dependents.
  2. Purchase of an employee’s principal residence.
  3. Payment of college tuition and related educational costs such as room and board for the next 12 months for you, your spouse, dependents, or children who are no longer dependents.
  4. Payments necessary to prevent eviction of you from your home, or foreclosure on the mortgage of your principal residence.
  5. For funeral expenses.
  6. Certain expenses for the repair of damage to the employee’s principal residence.

Those are the only times you can take a hardship withdrawal from a 401k.  The IRS says you can only have a hardship withdrawal only if there aren’t any other funds that you can use for a downpayment.  You will probably need to talk to your HR about their specific policy on how they document it.

Also, after a hardship withdrawal, you are not allowed to make any contributions to your 401k for 6 months.

I wasn’t trying to be rude, I’m sorry if it came off that way.  I just think retirement savings are really important, especially with the uncertainty over Social Security for us.

 

Post # 7
Member
7431 posts
Busy Beekeeper
  • Wedding: October 2009

You have to check with the company who owns your 401k to be certain. Not all companies do the same thing. But yes, you can take it out

Post # 10
Member
14496 posts
Honey Beekeeper
  • Wedding: June 2011

oooh, oops.  I didnt think you could simply withdraw and not pay back at all.  I only thought you could borrow against it.

Post # 13
Hostess
18643 posts
Honey Beekeeper
  • Wedding: June 2009

@Jazziberry: I’m not completely sure if they would deny it if you have other money or not.  It just seemed like they were saying that you need to not have other funds.  If you talk to your company and it’s an option, you might want to talk to a CPA or tax advisor to see if they know some intimate details about how the IRS thinks these things through.

I’m glad you didn’t think I was being mean.  I want the best for all my Bee buddies!

Post # 15
Hostess
18643 posts
Honey Beekeeper
  • Wedding: June 2009

You’re welcome!  I love money stuff lol.

PS – We are starting the process of buying a home too!

The topic ‘Question about using 401k funds to help boost amount for down payment…’ is closed to new replies.

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