Can we withdrawl money to buy a house from my 401K?
I have $28,000 and found a house for $29,000. Can I withdraw the money to buy the house and pay the penalties at tax time, or do I have to pay right away? The house is also in short sale.
PS I can't get a loan, my credit score is only 570 and I have too much debt. Thanks for the help.
- 1 decade agoFavorite Answer
Are you sure you want to buy a home right now? 28k is a lot of money for you to save and invest and possibly be able to get an even better deal. 570 is low, but you can bring that up. I bank with USAA and they have a credit monitoring program that you can join. If I were you I would join that and focus on getting my credit up so that when you do go to buy a home, you can (continue to help your credit) when you get a loan for a house and get a low interest rate score. Also, they will probably have some other kind of house buying incentive that you can take advantage of if they are not offering the first time buyer 8k anymore. I say focus on getting your credit together so that you don't have to use your money like that. Be smart financially ... :o) Hope everything works out!
- ?Lv 71 decade ago
No the Federal Tax of 20% plus the 10% penalty are taken out immediately. You can only withdraw your contributions with permission of your company. Buying a house does not qualify as a hardship. Inquire about taking a loan.
- ScottoLv 61 decade ago
If you pull your money out you will have sustainably less than the 28K take at least 20% off the top for taxes, and even more for penalties for early with drawl. It will depend on the rules of the plan you are currently in.
Also you still have to figure in Insurance for the home, and taxes on the property, closing costs can be up to 3K on that house.
- DebdebLv 71 decade ago
You may be able to borrow from your 401(k) for a few well defined reasons, and buying a home is one of them. Call your HR department and find out what you need to do. It's been a long time since I was in benefits, but I don't think there are penalties. I'm pretty sure we deducted a monthly amount from your paycheck, and that was all as long as you remained in our employ, but I did disability so I'm not sure I'm remembering correctly.
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- 4 years ago
No you cannot. In addition, you cannot take money out of a 401K plan unless you leave the company.
- Anonymous1 decade ago
no you have to pay the tax immediately
according to the new federal rules you have to pay 30 % tax immediately.call your HR department and en quire about it
i hope my answer is of some use to youSource(s): http://www.tuscaloosahousesforsale.com/
- Anonymous1 decade ago
Yes, to buy a house, to save a house or for education. Those are the federal laws.Source(s): I did it.
- RealtoratheartLv 61 decade ago
Brandon, 401K possibly, check with your tax man
570? You'll need to talk with lenders.