When withdrawing $$$ from 401K for 1st home purchase, is 10% penalty exemption capped at $10K?
In answer to your question, each plan has a few differences as to what a 401-K can be used for, how much can be borrowed against it In most instances money used to purchase a home normally is not penalized. You may not touch the money it normally have to go from the plan to the escrow closing agent. To be sure how your plan is set up for this home purchase it is best to check with your plan manager. Some times your H/R director would know, but if they don't always check or call your plan manager. I hope this has been of some use to you, good luck. "FIGHT ON"
by Skip - 17 hours ago
The first time homebuyer clause is for $10,000 only, as you stated. However, I believe if you open a traditonal IRA and then roll the money from your 401K directly into the IRA, you can avoid any fees and penalties. The government also allows a 60-day transfer to move money between similar retirement vehicles without penalty (but it is a strict 60 days), which may be perfect in your case. I would suggest researching brokers (such as TD Ameritrade or Schwab) and picking the IRA you like best. Then go to a local office and get their opinions on how to transfer your money with the least resistance.
by jerry - 17 hours ago
If your 401(k) allows for a loan to purchase a home, that may be a better option. No taxes, no penalties and you basically pay yourself back principal and interest.
by mrswho86 - 17 hours ago
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