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re: Borrowing money from 401k...how does this work usually?
Posted on 2/24/16 at 7:51 pm to Powerman
Posted on 2/24/16 at 7:51 pm to Powerman
quote:
Up to 10K is permissible with no tax consequence. But if it's with a current employer I think you might have to do the loan
Can you take out 10K net or 10K gross?
I know you have to pay taxes on the disbursement
Posted on 2/25/16 at 7:24 am to Croacka
quote:
I know you have to pay taxes on the disbursement
Not if used for a first time home purchase
And even the first time home purchase has a pretty loose definition.
See below
quote:
Then, there's your home. Uncle Sam offers various tax breaks for homeowners. He'll even bend the IRA rules a bit to help you get into your house in the first place.
You can put up to $10,000 of IRA funds toward the purchase of your first home. If you're married, and you and your spouse are first-time buyers, you each can pull from retirement accounts, giving you $20,000 in residential cash.
Even better is the IRS definition of "first-time homebuyer." Technically, you don't have to be purchasing your very first abode. You qualify under the tax rules as long as you (or your spouse) didn't own a principal residence at any time during the previous 2 years. In fact, you can even share your IRA wealth. The IRS says the first-time homebuyer using your IRA funds for a down payment can be you, your spouse, one of your children, a grandchild or a parent.
But be careful not to take out your money too soon. You must use the IRA funds within 120 days of withdrawal to pay qualified acquisition costs. This includes the costs of buying, building or rebuilding a home, along with any usual settlement, financing or closing costs.
Read more: LINK
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