Hello...has anybody took part of your investment accounts and use part of you downpayment towards your first home?
we have a general question about taxes cause its still taxable income. how bad did it effect you when you went to file for the year vs. now being a home owner?
thanks
im almost in contract as long as these little things add up
MCDO15
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Re: IRA or 401k part of your down payment?
Posted by am470
Just a word of caution (and I could be wrong): Some employers won't allow you to do this even if it is for a house. The only reason why I know this is that my husband took over for another lawyer who quit after his firm wouldn't let her withdraw money for a house.
in one of the post..i stated DW lost her job due to merger so since she is fully vested...she gets to keep retirement. we have a choice where to roll it over to. we are chooseing an ira so we can have down payment. its less then 10k and figure for now, it would be better for us instead of using this when we are in our 60's when this amount we have would be pretty much useless once we get old
Blu-ize
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Re: IRA or 401k part of your down payment?
Posted by MCDO15
Posted by am470
Just a word of caution (and I could be wrong): Some employers won't allow you to do this even if it is for a house. The only reason why I know this is that my husband took over for another lawyer who quit after his firm wouldn't let her withdraw money for a house.
in one of the post..i stated DW lost her job due to merger so since she is fully vested...she gets to keep retirement. we have a choice where to roll it over to. we are chooseing an ira so we can have down payment. its less then 10k and figure for now, it would be better for us instead of using this when we are in our 60's when this amount we have would be pretty much useless once we get old
Do what is best for you, however, that amount invested will be much more than $10K when you are in your 60's.
MCDO15
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Re: IRA or 401k part of your down payment?
Posted by Blu-ize
Posted by MCDO15
Posted by am470
Just a word of caution (and I could be wrong): Some employers won't allow you to do this even if it is for a house. The only reason why I know this is that my husband took over for another lawyer who quit after his firm wouldn't let her withdraw money for a house.
in one of the post..i stated DW lost her job due to merger so since she is fully vested...she gets to keep retirement. we have a choice where to roll it over to. we are chooseing an ira so we can have down payment. its less then 10k and figure for now, it would be better for us instead of using this when we are in our 60's when this amount we have would be pretty much useless once we get old
Do what is best for you, however, that amount invested will be much more than $10K when you are in your 60's.
while true....once we are in a perm job and contributeing to the 401k, we will catch up rather quickley. some things you just gotta take care of now...
i wish we could invest in the future but today, a co-op is calling our name and this will be a wise investment also...
kel2004
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Re: IRA or 401k part of your down payment?
My brother did this and ended up owing $20k in taxes.
NPbride
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Re: IRA or 401k part of your down payment?
Posted by kel2004
My brother did this and ended up owing $20k in taxes.
Same thing with my cousin. Except she didn't borrow for a house. She now has to pay the IRS something like $2000 per month for the next year.
Blu-ize
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Re: IRA or 401k part of your down payment?
The reason I hesitate to agree with taking money out of your IRA accounts is because my parents never really had the oppy to have such accounts and now my Dad is 73 and has to work to supplement SS. My mother is disabled. I help my parents somewhat, but it breaks my heart that I can't support them and it breaks their heart that they don't have enough to retire. I would pay a higher mortgage payment than take money out of retirement accounts.
cloddy
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Re: IRA or 401k part of your down payment?
We had to withdraw to buy our house and we ended up owing on our taxes for the first year which was a huge dissapointment because with a house we were expecting a refund, but it wasn't too bad.
dandg
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Re: IRA or 401k part of your down payment?
IMO, not a wise decision. Good luck!
JuneGroom05
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Re: IRA or 401k part of your down payment?
I believe it is a wise decision. Once you convert your 401k to an IRA, you are allowed to take out 10k towards the down payment of a house, provided you weren't a homeowner anytime during the previous 2 years, without any penalty, however since it was previously a pre tax invesment, you will owe taxes on it at the end of the year. Granted, the 10k out of the retirment is a loss that is hard to replace since it will grow tremendously in the years before you retire, however the alternative for many is waiting a few years to save up the extra cash, in which case houses could easily increase 10 to 20%, so rather than wait, I think it makes sense if you don't have other options to use the 10k now and hopefully the home will appreciate even faster than the 10k would have as a typical mutual fund investment in your IRA.
SomethingBlu
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Re: IRA or 401k part of your down payment?
Not sure if you have made up your mind already...just wanted to add that my boss did this (borrow from her 401K) to make her downpayment (and it was A LOT of money). She has no regrets and a beautiful house. I asked her why she went this route since everyone says 'don't do it' and she simply said 'I wanted a house, was young and healthy enough (thank God) to keep working and knew that I had to pay myself back ASAP'. Luckily, with owning a house comes a great tax refund at the beginning of every fiscal year...so come 1st quarter you'll get some money back - just make sure your wife (or you) puts that toward a nice IRA.
I completely understand your statement 'a condo is calling my name'; who wants to pay rent forever? Just make sure you pay yourself back. The tax penalty now might be worth it, just also think about your future (which I'm sure you are). Good luck to you both!
