[jwssas]

I have 2 retirement 401k accounts. (one of my companies was bought out by the other)I would like to close 1 of them out and put the money into a down on property in which to live. How much in penalties will this cost me % wise.

[Fr_Chuck]

You did not mention your age, I will assume younger, You will have to pay all the taxes on the money you withdraw and normally a 10 percent penalty. Also if you had matching funds from an employer, if these funds are not vested ( according to the rules of your plan) you may loose those also.

You need to sit down with the plan administor of these and/ or read your copy of the plan to get exactly what details would effect your specific plan

[fredg]

Hi,
I agree with your previous answer about talking with your Plan Administrator.
He/she can answer your questions as to the options you have, and how much you will lose.
If you close out a 401k account, under 59 1/2 yrs old (in some cases; in other cases, might be older), you will pay a 10% penalty. Additionally, there will be a 20% withholding for Federal Taxes, and you might want an additional 4% withheld for State Taxes (if your State has a State Income Tax).
Please talk with your Plan Administrator. Best of luck.

[CaptainForest]

I disagree with part of this answer. Specifically this part:

Hi,
and you might want an additional 4% withheld for State Taxes (if your State has a State Income Tax).

I wouldn't recommend that upfront.

If you can manage your money, take it, put it in a bank, earn some interest, don't just send it off to the government before you need to. But, if managing money is a problem, then follow Fred's advice.

[ScottGem]

Before closing the account, I would check for a couple of issues. First, its possible that using the funds as a down payment on a home will qualify as a hardship withdrawal, avoiding the penalty. Second, You might be able to take a loan out against the account, which allows you to pay yourself back with interest.

If you don't qualify for hardship and you do withdraw the money, then you will be subject to a 10% penalty, plus you will be taxed at your current tax rate.

[fredg]

Hi,
I do agree with the answer before this one, about having the 4% taking withheld. If you can manage your money, so if you have any State Taxes to be paid on it, you can make that payment for the year, then it's best NOT to have this withheld.
If however, you are like many, many tax payers, and let the Government hold your money for you, then pay you back a refund, then it's the way to go.
Personally, I agree with "earn some interest". The Government doesn't pay interest in the money people get back in "refunds" for the past year's taxes!
If you do have a State Income Tax, you might want to check with a CPA or someone, to see if there is a "penalty" for not paying an "estimated" tax on money you get, in which there were no State Tax deductions.