Utilizing my 401k with an old employer
I have a 401k plan with an employer I no longer work for in 3 years. I want to use the funds for my second deal, but I don't want to pay the early withdraw fees, etc. What are my options?
I know I can't take a loan out since I no longer work there... Any recommendations on how to strategically use these funds? Transfer to a ROTH IRA, is an option I was looking into. I would appreciate any feedback and advise.
Thanks
Jon
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@Jonathan Cevallos @Jaron Walling
Gonna push back on Jaron's sensible post for a bit. It is a different situation if you are investing the money, instead of consuming it to get by then its a math problem. 401Ks etc. gather tax free and thats a powerful factor, but real estate CAN outperform if well done. And current use can be more valuable than future use.And if you can legitimately use the cares act you don't have a penalty and have a 3 year window to mitigate the tax hit. You can really jumpstart stuff using funds like that.
Don't be too sure you can't get a loan from your old employers account, or move it to one where you can. I am still doing loans from a 401K from an employer I left 8 years ago--it depends on the plan. Roth's are great, you do have the tax hit on making the transfer but no penalty.
The loans are so powerful...they helped us by our starter home, and we were able to use one to buy our first investment property which doubled in value. It doesn't show up on your DTI and you pay back the money to yourself.