Reply to Explain to me why it's stupid to take $$ from a 401K for a down payment

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Reply to "Explain to me why it's stupid to take $$ from a 401K for a down payment"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Some people shouldn't give financial advice.

There is no tax penalty.

We borrowed from ours and paid it back with interest to ourselves in 5 years.  Did it 10 years ago to pay off credit cards. Our 401K is healthy.[/quote]

Calm down.  The question is not limited to loans.  There is a 10% percent penalty in early withdrawals from a TSP account, for instance, as I recall reading once.  So one would pay automatic withholding (typically about 20 percent), additional withholding in anticipation of state taxes and being bumped, possibly, to a higher tax bracket.  So IF there is a tax penalty for an early withdrawal, that plus everything else could amount to nearly 40 percent out.  Taking a loan for a home from the 401k is generally a better idea.[/quote]

To be honest the employer match helps makeup the 10% penalty so it's really only about 7%' You do have to pay taxes regardless if you take it out now or in the future. If you save your own you already paid taxes.[/quote]

The "employer match" is YOUR money.  It doesn't reduce the amount you pay.  [/quote]

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