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View Full Version : Home payoff with 401k


datdudeb
May 28, 2007, 07:33 PM
How is everyone?
My question is I have enough in my 401k to pay off my home that I just purchased. I'M 40 yrs old. It will empty out my account ,but, I guess I'm looking at the freedom of no mortgage payments. Any advice.

ebaines
May 30, 2007, 02:53 PM
Don't do it. You will owe income taxes and penalties on the withdrawal from your IRA, so figure on only half of your account being available to pay off the mortgage. You are better off paying the mortgage, deducting the interest payments from your taxes, and continuing to have the 401(K) grow tax-free until your retirement. This would also leave you with little for retirement - you'd be "house poor," which is a very inflexible place to be. You're better off having, say $100K in your 401(k) and a $50K mortgage than having no 401(k) and no mortgage.