Max out 401k of save for house down payment?
Related Posts
Coach
More Posts
Rising Star
An intercontinental ballistic millisle can hit America from anywhere on earth in 36 minutes.
The President likes to golf at least twice a week and is apparently unreachable by his senior staff for three hours at a time during games.
https://www.google.com/amp/s/www.washingtonpost.com/politics/trump-white-power-tweet-set-off-a-scramble-inside-the-white-house--but-no-clear-condemnation/2020/06/29/6fd88c2c-ba21-11ea-8cf5-9c1b8d7f84c6_story.html%3foutputType=amp
Chief
Multiple openings EY
Please help me choose
Additional Posts in Consulting
Partners, if you made it to Partners earlier than your peers, what were the things you did right? And is it that you can make Partner in 6-8 years out of undergrad? Especially with the Mck “straight to Manager” Route. McKinsey & Company Boston Consulting Group Bain & Company Strategy& EY-Parthenon
Tips to sell work?
CAIA vs CFA?
Best office chair? My back is so angry with me.
Chief
Eat a donut for breakfast or paint the walls beige?
You should always max out your 401k! How much will you need for a down payment? Are you a first time home buyer? If so, you can transfer $10k to an IRA, and then take it out tax free as a first time home buyer. You can also take out a loan against your 401k (half the balance up to $50k) completely tax free as a first time home buyer. You would have to pay back the loan, but I did a repayment plan over 10 years. They “charge me interest”, but it’s interest that is essentially repaid to myself. Basically a way to make up for any dividends lost from the money I took out, so by the end of the 10 year repayment period, I will be back on track.
So basically, if you’re a first time home buyer and have $110k+ in your 401k, you can take out $60k tax free. As opposed to cashing out your 401k. In a scenario with the same $110k+ you would probably end up losing half the money to early withdrawal penalty and taxes anyways.
Wait, don’t take 401k loans and don’t divert retirement investments unless you REALLY need a home. It’s the worst investment you could every make
Beige is out M1, go grey!
Do both
Or you could, GASP, wait a little longer and just save the cash down payment separately, so that your 401k is untouched and continues to grow.
Not always a good idea to have your down payment savings invested in the stock market when your have a shorter time horizon. Even 1-2 years, it’s better to just put it in a higher-interest-bearing savings account or money market, to ensure you don’t lose any of it due to market volatility, especially when you the need cash to buy.
A home is not an investment. It’s a place to live.
Yes
That’s a strong “No No” if you talk to any FPA or Tax advisor.
How is the interest of your 401k loan repaid to itself?
Because I borrowed the money from myself. So the extra $125/month of interest is actually just going back into my 401k.