Should I Use My 401k to Buy a Home?
Using 401K Funds to Purchase a Home
With a booming housing market and rising interest rates, many potential first time home buyers find themselves struggling to save enough for their down payment. For those who have access to 401k funds they may wish to consider using this resource as an additional source of savings. However, is it worth tapping into your retirement assets in order buy yourself a house?
The 401k plan is a great way to save for retirement with an employer-sponsored account. The money in your nest egg can be accessed either by taking out loans against the balance or withdrawals before age 59, but there are some important rules you should follow! For example: taxes are taken from contributions during employment then any withdrawal after that point will also incur an additional withdraw penalty up to 10%.
Home buying is one of the most important decisions you will make in your life. It’s also an expensive endeavor, which can put a dent into any saving accounts or retirement funds that are already tight after college fees and other necessities. However, there could be some relief that are coming soon! The IRS has just announced new guidelines on how they treat withdrawals from 401k accounts during times where loans were taken out-- meaning it won't count towards income.
Investing in your retirement is a smart move, but what if your down payment can be paid with 401k funds? There could be an option that'll help! Speak with us and see how using 401k money could work out better than expected.