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pageantgirly · Jul 7, 2007, 06:23 AM

I have found a vacation home that I would like to purchase.. I need 20% down.. I want to get the money out of my 401k plan.. not worried about the taxes and penalties.. just want the money... how can I get it. Thanks

RichardBondMan · Jul 7, 2007, 08:16 PM

Easy, write the 4019k) provider a letter, use their website, visit an office. If you still are employed with the plan owner (your employer) visit your HR Dept or call them. I understand you are not concerned with taxes, eenalties but you will get many responses that warn you it's a bad idea in most cases, especially for the nature of purchase you want to make.

pageantgirly · Jul 8, 2007, 07:07 AM

So there would be no hassel? Everybody has told me it is like pulling teeth... thanks again for the help

RichardBondMan · Jul 9, 2007, 04:34 AM

Why even ask others, they don't have your money, ask the 401(k) provider or your HR Dept who sent them your money. I know you are concerned about how difficult to gain access to your money, but did you understand they are severe tax and other penalties for a premare withdrawal? (prior to your age 591/2) and that a beach home, especially if it's not your primary residence) is a luxury. Most finanacial advisors discourge even hardship withdrawals.

ScottGem · Jul 9, 2007, 05:41 AM

Submitting a withdrawal request is failry easy. Depending on your company they may try to talk you out of doing what is a foolish plan. But there may be a processing period of weeks or months depending on the plan. You don't say how much you need or plan to withdraw. But its possible you will need to withdraw almost TWICE the amount you need for the down payment.

You NEED to worry about the taxes and penalties. First, they will automatically withhold 20% against your tax liability. Plus there will be a 10% penalty. So lets say you need $20K, you will need to withdraw at least $25K to clear the $20K you need. Without knowing your tax bracket, its possible that the $25K in income will bump up your tax bracket, this means that not only may you owe more that the 20% withheld, but your regular income will be taxed at a higher rate. And that's not counting the 10% penalty whichy ia another $2500 (assuming a $25K withdrawal) you will need to come up at tx time.

Have you looked into a loan against your 401K? The interest rate is usually preety low, and you are paying the interest to yourself. Your whole payment goes back into your 401(k) account.