Looking to buy in 2-3 years. I feel like I'm saving well, but could save more pre-tax with my 401k. Can I reasonably access 401k funds to buy a house, or should I keep just putting 10% to 401k and investing post tax money to save up a down payment?

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I wouldn't touch retirement funds for a down payment.

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OP lookup hardship exemption which (this makes no sense) buying a house is a qualified exemption in your 401k

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https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-hardship-distributions#2 purchase of primary residence is a qualified exemption under IRS guideline for hardship. It’s smart to put more in 401k to buy a house knowing your putting in extra for this. I’m so sick of the “don’t ever touch your retirement ever” crowd. The reality is buying a house is one of the best financial decisions you can make and it will protect you from inflation. “Certain expenses are deemed to be immediate and heavy, including: (1) certain medical expenses; (2) costs relating to the purchase of a principal residence”

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Yeah I think IRA is more favorable, but it has limits.

There will be early distribution penalties, would recommend a high yield savings account instead.

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Interesting wasn’t aware of this

If you take it out of your 401k you’ll pay the taxes plus a penalty. Better to decrease 401k contributions and put it in money market rather than taking it out of 401k 2-3 years from now

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This is not true

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401k loans are good liquidity options if your employer offers them....$50 origination fee and you set the amount (lower of $50k or 1/2 your total account value) and 1-5 year payback timeline with no prepay penalty. Interest rate is low (3%) and it goes into your account effectively paying yourself. it also pauses your returns/losses in the market for the dollars outstanding. Biggest downside is that should you lose your job or quit, you have to pay the outstanding balance in 60days or it’s treated as an early dispersment and you get charged 10% fee + taxes on outstanding balance

smart

It's post tax. There's no additional tax break on top of the loan. You can specify repayment terms from 12-60 months. Comes out of each check so twice a month.

You can use up to 10k from IRA for first time home purchase

My understanding of the roth ira is that I can use all of the contributions ($6k/yr) as that money is post tax. Which is one of the reasons I do roth rather than traditional

Dumb idea

I'm reading up on that hardship distribution D1 mentioned, but if it is what it reads as then I don't see why I shouldn't max my 401k contributions knowing I'm going to use some of that extra on a house - what would be your argument against it?

You know you work at FTI when you’re not getting paid enough to max out your 401k and save for a down payment at the same time.

Tell me you work at FTI without telling me you work at FTI.

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