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Personal Finances / Buying or Selling a Home


Subject:  Re: Downpayment Sources Date:  5/10/2013  7:40 PM
Author:  TMFPMarti Number:  125247 of 128887

"That's if you jump through all the hoops, and don't leave your job before you've put it all back."

Are you certain of the truth of that statement? I am not. And it certainly was not true when I took a 401-k loan for home purchase.

This discussion got me curious enough to do some digging in the Code. Of course, there's nothing in section 401 where you'd think it would be. My second thought was section 72, where they hide just about everything regarding retirement plans. Bingo!

My curiosity extends only so far, and there's so much crammed into that section, that I didn't dig any further. I did notice that there seem to have been significant changes in 1982, there's a $50,000 limit (or lower), and primary residence loans must be paid back in a "reasonable" time (as opposed to other loans, which must be paid back in 5 years).

I too have something rattling around in my mind about accelerated payback if you leave employment, but I can't cite a reference. No matter. The most important thing to remember about anything regarding 401(k)'s is that there's not a lot in the law, and much is left up to the plan to decide. When you're contemplating doing anything regarding your 401(k) make sure you understand exactly how your plan deals with all situations you might encounter.

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