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I am in the process of selling my home AND changing jobs.I will be making a profit (sale price minus outstanding mortage). I plan to pay off my credit card debt with the proceeds from this sale, or am I better off taking the 401k distribution available to me because of the job change. My intent is to purchase a nother home in about 12 months

***If you are under age 59 1/2, you don't want to be touching your 401k plan. You would have to pay the tax plus 10% penalty, unless you qualifed, under some exception, to be free of the penalty. You would still have to pay the tax. By the time the feds and state got through with you, you could end up paying over 50% tax on such a distribution. One suggestion would be that you roll the plan over (direct transfer) into an IRA or opt to leave it in the current plan (if allowed). You could use the IRA as a conduit to hold the 401k and later move it into a new employer's plan, if you so decide. Depending on circumstances, you might want to take distributions over a period of years, in order to avoid penalty. Again, the distributions would be taxable.

***If you lived in your home, as your primary residence, for two, out of the last five years prior to selling it, you would qualify for up to $250,000 in tax free gains (($500,000, if married filing jointly).

Paying off the credit cards sounds like a great idea. I'd do that ASAP from the money you get from the sale of the property. The additional amount you may have to borrow, for a mortgage on your new home, should end up being a much cheaper way to go.

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