401k Withdrawal for a house?

Walt_Felix said

As long as they don't loose or change jobs. If you lose your job, or change employers, you must pay back the loan in full within a short period, often 60 days. If you don’t, it is treated as a withdrawal and subjected to the same taxes and penalties. 401K accounts can usually be rolled over into 401K accounts at a new employer, or into an IRA, without triggering tax payments or penalties, but loans from a 401K cannot be rolled over.

Click to expand...

WRONG!!!

It's not a loan against the 401K... IT'S A WITHDRAWL for the home purchase. big, big, HUGE difference.

Lots of really bad info in this thread.

There isn't a penalty for first time homebuyers that withdraw up to 10K... I used to work as a CPA, so I might know just a smidge about the tax implications. Would you like me to pull the IRS code sections?

You have 120 days to use the funds for a home purchase. So it's important to be careful if using this approach.

http://www.themoneyalert.com/Sitstayrollover.html

"There are, however, exceptions to the rules of roll-overs for first time homebuyers. If you’re emptying out your former retirement fund and wish to use up to $10,000 towards the purchase of a first home, you’re allowed to do so. You are taxed on the withdrawal, but you do not have to pay the extra 10% early withdrawal fee. You also have up to 120 days to use the $10,000 on a first-time home purchase rather than the basic 60 days."

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For those that think interest will outstrip inflation... good luck on that one.