Using 401K for property

[Antonio Williams]

I would like to withdrawal some money (~10k) from my 401k to help my mother purchase a property; is anyone familiar with this process? If you withdrawal money from your 401k are there penalties and/or taxes to pay? I would appreciate any help!

[Basit Siddiqi]

@Antonio Williams @Marlen Weber

You may want to reach out to the HR department of your employer.

Your retirement fund admin may allow loans against your vested 401K balance.
There are normally 2 loan provisions

General & Home purchase
Home purchase loan provision allows for a longer pay-back period.

Normally loans are not added to your income and not subject to taxes/penalties.
Your future paychecks are reduced to pay-back the loan balance.

There are also potential risks when taking a 401K loan, the balance being due upon being let go or quitting.

Alternatively, this year cause of the cares act, you may potentially be able to take out a distribution(no requirement to pay back) and it wouldn't be subject to penalties.