Ask Experts Questions for FREE Help !
Ask
    rlrlopez's Avatar
    rlrlopez Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Oct 24, 2008, 10:57 AM
    Which on ehave less tax penalties: withdraw from IRA or 401K?
    New Employeer but need access to cash to purchase a home... should I Roll-over to an IRA and take the money from there or cash out now from the Old employeer 401k?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Oct 24, 2008, 12:16 PM
    If this is your FIRST purchase of a home, roll the 401K into an IRA, then withdraw from the IRA.

    Reason? You can withdraw up to $10,000 from an IRA to pay the costs of a first-time home without penalty. You will pay taxes on the withdrawal, but NOT the 10% Early withdrawal Penalty.

    Now, another option is to roll the old 401K into the new 401K and then borrow from the 401K. This is especially a good option if you need MORE than $10,000 for the home purchase.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

401k early withdraw penalties [ 16 Answers ]

I am considering quiting my present job and using my 401k money to open a business and was wondering what percentage of the balance that I would be subject to loose?

Withdraw 401k over age 55 [ 1 Answers ]

I am over age 55 and have a 401k with about $200,000 that I need to access due to unemployment of > 4 months. We bought a house 5 months ago. Based on current economy, there are very few jobs in my occupation in this area at this time. Can you withdraw 50% of a 401k? How can I access about 1/2...

401K penalties? [ 3 Answers ]

Hello, I have a 401K worth roughly 30K, but I am interested in cashing it in to assist in the down payment of purchasing a house. What kind of penalties/taxes might I encounter and is this a really dumb idea? The other part of the money would come from selling stock, which I know there will be a...

Withdraw 401K [ 2 Answers ]

If I quit my job, can I close my 401k and take the money and invest it myself? I have 71000 in the account and I want to start my own business, but I would like to use the 401k to pay off my house and other debts.

Withdraw 401k [ 1 Answers ]

I am getting ready to leave my employment with UPS and would like to withdraw all of my 401k to get all current bills paid off and start over. I am moving to another state

View more questions Search