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Reply to "Cashing out 401K to payoff mortgage"
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[quote=Anonymous][quote=Anonymous]Actually, allow me to clarify. $100,000 early withdrawal in the 25% bracket. Total taxes and penalties due: $35,000. So, you buy $10,000 in points on a new mortgage. Because you are in the 25% bracket, the actual tax savings of that is only $2,500. Result is the same: You pay the $10,000 penalty, then you spend $10,000 in points. The tax savings is $2,500 and you still owe $32,500 in taxes PLUS you paid the $10,000 for the points. Dumb.[/quote] you are forgetting that after purchasing the property you are renting it out for an income stream. There are also ways to use 401ks without penalty as real estate investments http://www.ehow.com/how_5896869_buy-real-estate-401k.html [/quote]
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