Using 401K to purchase first property

[Johnell Jones]

I plan on using a portion of my 401k (50,000) as a down payment on my first property. I can't take a loan or hardship because this is from a previous employer. And my current job doesn't accept rollovers. I know I will take a penalty and pay back taxes. Is there a way to bypass this or not let the hit be lessened? I looked in IRA but there is a timeframe before taking (5 years) and I want to start in a couple of months on the first property. I have looked at a self-directed IRA but I want to receive all my profits from my property. What do you guys think? I'm almost to the point of just taking it out and dealing with it.

[Basit Siddiqi]

Just be mindful that the 401K distribution will be subject to 

A) Federal Taxes
B) 10% Penalty
C) State Taxes

It may be more advised to take a 401K distribution in a year where you are not making as much money as your overall taxes might be lower.

The question you have, is will the return on the real estate that you purchase, out weight the return that you will get in the stock market that it is invested in?