Skip to main content
No. of Recommendations: 0
Greetings, dpr56, and welcome. You wrote:

<<I have an IRA account that's adequate to fund retirement 100%. I also have a 401K account that I would like to make a withdrawal from to help pay for a new home purchase. I am well aware that I must pay income tax on the withdrawal but I would have to do that anyway when I withdraw from the 401K. My thinking is that aside from income taxes on the withdrawal I am really just transferring the Assets from 401K form into the form of real estate which is likely to appreciate at about the samr rate as my balanced IRA portfolio.

Question is whether a move like this makes any sense or are there other ways to rollover a 401K into real estate that I would live in and possibly even avoid taxes until the real estate is sold? >>

If you're making a straight withdrawal, then you will be taxed. There's no way to avoid that except to take a loan from the 401k. I know of no plan that would allow a retired employee to do that. Still, I suppose it's possible some plan somewhere does. And if yours is one, then you still don't win. The loan must be repaid to the plan with after-tax dollars. The interest you pay yourself with those after-tax dollars gets taxed again when you finally do take legitimate withdrawals from the 401k. And if you don't pay back the loan, then all the defaulted proceeds are considered a taxable distribution.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.