401K or IRA withdrawal without penalty
401K or IRA withdrawal without penalty
I missed the opportunity last year under cares act to withdraw from Retirement accounts penalty free. I am now seriously considering withdrawing upto 100k to invest in primary residence purchase. This is not my first home and I don't want to do 401k loan. Is there a way to do withdraw money from Retirement funds penalty free for my situation? Want to avoid paying the 10% penalty if ar all possible.
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Re: 401K or IRA withdrawal without penalty
https://www.investopedia.com/terms/r/rule72t.asp
Hard to believe this would be a good financial move unless you have some very unique circumstances.
Cheers
Hard to believe this would be a good financial move unless you have some very unique circumstances.
Cheers
Re: 401K or IRA withdrawal without penalty
In general, you are not allowed to withdraw your elective deferral contributions to a 401k while working for that employer. An exception which some plans offer is for hardship withdrawals. Not all plans allow hardship withdrawals. Check your plan.
One possible hardship withdrawal allowed is downpayment on a your primary residence (does not need to be first home). Even if a plan allows hardship withdrawals for something else, it may not allow this one. Check your plan.
If you are allowed to do the hardship withdrawal for a home downpayment, you will have to pay tax and a 10% penalty on the money withdrawn. And you are not allowed to put it back - it is a permanent loss to your retirement plan.
You will have to certify to your employer that you do not have other sources or assets to acquire this money.
It is hard to imagine a scenario where this would be a good idea.
One possible hardship withdrawal allowed is downpayment on a your primary residence (does not need to be first home). Even if a plan allows hardship withdrawals for something else, it may not allow this one. Check your plan.
If you are allowed to do the hardship withdrawal for a home downpayment, you will have to pay tax and a 10% penalty on the money withdrawn. And you are not allowed to put it back - it is a permanent loss to your retirement plan.
You will have to certify to your employer that you do not have other sources or assets to acquire this money.
It is hard to imagine a scenario where this would be a good idea.
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Re: 401K or IRA withdrawal without penalty
Roth IRA contributions can be withdrawn penalty-free at any time. Not saying it's a good idea, just putting another option out there.