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    gpg's Avatar
    gpg Posts: 1, Reputation: 1
    New Member
    		  
    #1

    May 16, 2008, 06:57 AM
    Termination 4O1K rollong over into a IRA and collaeral loan
    Hello:
    I am terminating my contracy with my current company. I am purchasing a new house. Once my current 401K is terminated I have planned to roll thi into a IRA account. Can I take a loan against the new IRA account ?
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    May 16, 2008, 08:02 AM
    Yes, get the 401K amount roll over to Trad IRA. You can withdraw money from IRA and use the distributions to buy, build, or rebuild a first home without any early withdrawal penalty. You cannot borrow against IRA.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #3

    May 16, 2008, 01:31 PM
    Although there is no early-withdrawal penalty if the withdrawal from the IRA is for a first-time home purchase, you will have to pay ordinary income tax on the withdrawal, so it is not as attractive as a loan would have been. But as Mukata says, IRAs do not have a provision for loans like 401(k) plans do.
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