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|Subject: Pension withdrawal for new home||Date: 5/9/2001 1:12 AM|
|Author: jmbellv||Number: 29562 of 78143|
At age 55, we want to withdraw the entire pension account to buy a new home. At that time, the interest payments to the pension will stop, so we want to roll it over or use it. We have 4 years to go til age 55, and full retirement is planned at age 60. The pension account is from a previous job. We feel we don't need this money for retirement since we have a large 401K.
There will be enough, along with a small amount of the money from the sale of our present home that is mortgage-free to buy a house outright (without a mortgage.) Of course, income taxes will have to be paid on the pension money.
Question 1: Does it make sense to buy a house outright after paying all the taxes?
Question 2: Is it possible to roll over the money to an IRA or something else to avoid paying income taxes at the time of the rollover? We are wondering if then there is the possibility of taking out a loan for the house, paying monthly payments to the lender from the ex-pension money in the IRA, and then paying income taxes on the ex-pension money as we use it for those payments. This may also allow us to itemize since we'll have interest payments to the lender, but there may not be enough additional deductions to do that. At the present time, we do not itemize.
We're not sure how all of this works, what types of accounts may be available to allow the idea in question 2 to work, or if the question 2 idea is even allowed.
I would appreciate any factual input on this subject.
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