Germantown, MD · Member since 2014 · 2 posts · 0 votes
I have been thinking a lot about purchasing my first property, but I am low on liquid funds. I have considered taking out of my roth 401k because I believe there is no penalty for doing so for a first time home purchase. I plan on purchasing the property as an investment, either a rehab or rental and I figure I will make back the funds I take out so it can't be a bad option. Thoughts on this? Also, what other feedback/options do you propose for purchasing properties without liquid funds?
@Will Barnard thanks for the thought. I didn't even know there were such provisions so it's a nice thing to know. However, I'm not sure how long I will be at my job and if I chose to leave I would not be able to repay the borrowed amount within 60 days.
@Will Barnard thanks for the thought. I didn't even know there were such provisions so it's a nice thing to know. However, I'm not sure how long I will be at my job and if I chose to leave I would not be able to repay the borrowed amount within 60 days.
If you leave your job, you simply roll the 401k over to the next job, roll it to your own self administered 401k. Check with your current plan administrator and see what other options they can offer based on your potential scenario.
Roth 401k allows you to grow your retirement account tax-free! And you have big advantage being young and having your money grow in tax-free environment. That is huge, if you do it correctly, this will result in huge tax savings for you. Therefore I would discourage you from cashing out.
Recommendation from @Will Barnard makes a lot more sense - self direct it!