Withdrawing 401(k) to buy a home....

Discussion in 'The Bar' started by Lucky Pierre, Jun 1, 2012.

  1. Lucky Pierre

    Lucky Pierre Well-Known Member

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    Everyone follows in like sheep and they all say "never do it... horrible idea" - almost like a vomit reflex.

    In a perfect world, sure... let your nest egg grow and grow, live a modest lifestyle until you can save up your cash, etc.

    But...

    - If you can use your 401k to get into your dream house right now vs. having to otherwise wait 7-10 years to finally save up enough cash.

    - That's 7-10 years of living in your castle vs. living in a shithole, that easily seems like a quality of life value worth a 10% penalty.

    - At my age, I will be working for the next ~25 years away. I have time to rebuild.

    - Who is to say the investment in my house isn't in fact a better investment than my Fidelity mutual shit funds which haven't done a fucking thing for the past decade.

    - It's not like the money is used for a Vegas coke-whore vacation. It's like moving it from one pocket to another and there is a very real chance that the appreciation in my new house will be better than my mutual shit fund.

    I guess what I'm trying to say is that all these geniuses who say, "never, EVER, ever, EVER withdraw from your 401(k)" are full of shit if the alternative is stay in your shithole and cross your fingers and hope your mutual funds score big.
     
    Last edited: Jun 1, 2012
  2. synch22

    synch22 Well-Known Member

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    Don't u have to pay it back? If job loss or change its due and payable then right?
    I say do what u want, get in the house put a big chunk down and start trying to get ahead. 401'ks will never be what they were, there will be no more 8to 10 percent annualized returns bank on it!
     
  3. FunnyFarm2

    FunnyFarm2 voice of reason VIP Gold

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    How about a loan where you pay yourself back?
     
  4. Vyb

    Vyb serial chiller Gold

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    I get it. It's a good time to buy, too.
     
  5. Lucky Pierre

    Lucky Pierre Well-Known Member

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    ok, but why?
     
  6. Neesie

    Neesie Princess Parliaments VIP Gold

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    If you withdraw before you reach a certain age you have to pay a 10% penalty in addition to tax. You only have to pay it back if you take it out as a loan, not a flat out withdrawal. There are certain exceptions to the penalty if it's considered a "hardship withdrawal" but that's just for things like avoiding being evicted/foreclosure, education to further your career, medical expenses, and things of that nature.
     
  7. Porn Stache

    Porn Stache Active Member

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  8. stripes

    stripes Active Member Banned User

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    as your cpa, buy the fuckin house, fuck the insider bullshit of wall st thats been robbing your 401k for the past decade anyway.
    just work your ass off & hope for the best.
    i've been advising clients much differently in the past 5 years. wall st is really gasping for breath & desperate for the little guys buck.
     
  9. Neesie

    Neesie Princess Parliaments VIP Gold

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    Hells yeah! I'm doing that right now. Not a 401k, but I was lucky enough to have a relative pass on a couple of IRA's to me, and I'm buying a house. I'm gonna have to pay tax on the money I withdraw for a down payment, but I'm never gonna be able to afford a house if I don't take the money out now, and I'm gonna have to pay tax whenever I take it out, and the market is ripe for buyers right now, so like Booger says, sometimes you just gotta say "What the fuck?" :c
     
  10. idiotbox

    idiotbox Looking for a dime and found a quarter. VIP

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    are you a first time home buyer? if so, there shouldn't be a penalty for withdrawal.
     
  11. Neesie

    Neesie Princess Parliaments VIP Gold

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    Nope. That exception is only for $10K towards a down payment. I've done research, son...
     
  12. idiotbox

    idiotbox Looking for a dime and found a quarter. VIP

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    he didn't say whether or not he was nor how much he was withdrawing. i did when i built in 2002 with no worries.
     
  13. Mack

    Mack Well-Known Member

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    worst fucking thing i ever did.

    don't fucking do it.
     
  14. FunnyFarm2

    FunnyFarm2 voice of reason VIP Gold

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    Neesie when can I see a pic of your future house?

    My pm's work. :)

    I'd never show anyone else.
     
  15. Neesie

    Neesie Princess Parliaments VIP Gold

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    I must correct myself here. The limit is $10K towards buying or putting improvements on a new home for a first time home buyer. Carry on. :hat:
     
  16. Neesie

    Neesie Princess Parliaments VIP Gold

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    My bad. :)
     
  17. TripTo My Taint

    TripTo My Taint Well-Known Member

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    It's not quite bottom yet here in Tampa.

    Now would be a great time to have around a million cash to invest though, as rents here are much higher than mortgage on a home.
     
  18. idiotbox

    idiotbox Looking for a dime and found a quarter. VIP

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    daughter :hat:
     
  19. FunnyFarm2

    FunnyFarm2 voice of reason VIP Gold

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    Can you get a loan against your own money and pay yourself back so you have that money back in your 401k at some point in time?
     
  20. idiotbox

    idiotbox Looking for a dime and found a quarter. VIP

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    yes, you are essentially giving yourself a loan from money you accrued in said account.