School me on investing...

At the rate corporations are buying lands/homes I think focusing your money on the house instead of the 401K might be a solid move over 10 years.

Tough to say.

Nobody gets to enjoy a 401K. You can enjoy the house tomorrow.

 

Do you mean take a loan against the 401k?

 

My guess is if she is willing to bail on property generating money at half the supposed value that it is not being presented accurately. That's what my gut says at least. I don't know the age of the existing owner or their net worth so I can only use my gut.

 

Bingo!

 

No, pull from it to purchase the house.
Others here mentioned loan against it for a good chunk of the down payment and conventional finance the rest.

 

Yes. 1/3 of your 401k money belongs to sleepy Joe and the largest employer in the country.....not you.

If you see 100k in your account you really only have 65 k after the feds extort you and what your employer put in there.

 

IIRC you can get a low cost loan using your 401K fund as collateral, so you can avoid doing a withdraw and suffering the heavy tax burden, along with a penalty. But I also believe you can withdraw funds for a home purchase without penalty, but I believe that is for a primary residence only. But don't quote me on any of this.

Tax rules change often. You would be wise to seek guidance of a true professional on this, as it could help you avoid needless suffering. If not handled right, that "bargain" could easily become a burden.

 

Without getting into the politics, the mechanics you're describing are not correct.

A 401k is a tax deferred account, meaning that you get taxed at whatever your current tax rate is when you take the money out. My goal is to take distributions from my 401k (it will be an IRA by then, but samesies for this discussion) that reduce my tax burden as much as possible (to effectively zero, vs the high tax rate I'm paying now).

So by my having a mixture of funds in taxable accounts, tax exempt accounts (Roths), and tax deferred accounts (401k/traditional IRAs), I can structure my distributions to minimize my tax bill and end up where I NEVER pay taxes on much of what deposited into 401ks.

For instance, I'm 65 and I need $200K/year after tax to live on. I can take $100K out of my brokerage account (possibly some capital gains, but as I'm a member of this thread we all know those will be loss carryforwards ), $50K out of my Roth, and $50K out of my traditional 401k. All that would net me effectively zero taxes (saving the ~$17K in taxes you'd owe on your 401k if that was your only retirement savings).

So in summary, this isn't a silver bullet where you can never pay taxes on any of your retirement funds, but with some reasonable planning around ways to optimize your future tax bill (primarily through income management and allocation between tax free/exempt/deferred accounts), you can actually make a traditional 401k the most lucrative account you've got (no taxes now and no taxes later).

 

I understand some of what you said but still don't see him pulling it out underage (today) without penalty. My wife works for one of the big 3 tax firms so we are somewhat hip on navigating tax penalties.

What you said is at age 65. ....Theres 2 problems with that. 1 is he wants a house NOW, and the 2nd is you're assuming he makes it to age 65.

The laws are written in favor of the parasitic government and its employees, and also YOU dying young. We plan to retire at 50. FWIW.

 

Have you looked into your plan? None of the plans I have ever participated in would allow a withdrawal for something like this while still employed (I guess I’m assuming you are still employed there). You also need to do a deep dive on taxes and penalties especially if you are under 59.5 years old. At that level it will be about 50%, so you’ll need to withdraw 300k to have 160k.

 

https://money.com/use-401k-to-buy-a-house/

 

You still have to have a hardship provision in your plan. I’m not sure how common it is, but I’ve never participated in a plan that had one. In the plan I helped manage, we purposely left that out to save people from themselves.

 

Smart.

I've had guys cash out their 401k only to lose their fucking minds in April < 12 months later.

Fascinates the heck outta me

You can tell them beforehand 1/3 of that money ISN'T theirs....they just flat-out out don't understand it.

 

Who's our resident JMIA holder again?

 

you pick up wbd yet?

 

Don't. They report earnings this week and it won't matter what they report, the damn thing will crater.

 

good riddance. maybe they'll have to dump mountain biking back to Red Bull for pennies on the dollar

 

Nah.

 

OTOH, WBDs free cash flow yield per share is 30%. Find another S&P500 company that high.

I'll wait.


(yes, I'm making excuses. )

 

Goldie was the original cheerleader, I bought some (too much)