peacebee: blog 
peacebee's blog
any ira/401k intellect out there?
Published Nov. 16, 2008
I am considering buying a home! So lately, I have been watching my IRA and my 401K helplessly from the sidelines...or not watching it so I don't cry...and am now considering buying a house! I read the following on a Wells Fargo site:
"First-time home buyers, defined by the IRS as not owning a home in the past two years, can withdraw up to $10,000 from an IRA to help make a down payment. You pay ordinary income tax on any pre-tax contributions and earnings, but there is no penalty. If the Roth IRA had been open for less than five years, there would still be no penalty; however, you would have to pay taxes on any earnings. "
So if there is anyone out there who knows...if I have an IRA and a 401K...can I take 10K out of each one? Or is that 10K total per individual? In other words, if I am looking to withdraw 20K (and don't have the couple's option) is that possible given that I have both a 401 and an IRA? Just curious!
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GOLO member since April 10, 2008
November 17, 2008 5:52 a.m.
November 16, 2008 2:49 p.m.
As for the dollar amount, so far as I know you can take ANY amount out - the $10k issue just shelters that portion of the withdrawal from the additional 10% penalty. Example: withdraw $15k, pay an additional penalty of $500 on the $5k excess.
By the time you get through paying federal and state income taxes, with or without any penalty tacked on, you could easily be seeing 40% to near 50% of your funds going not to your house but to the government. (Roth IRA is a little trickier.) Also, you currently will have to "sell" more shares to come up with the dollar amount you need.
And a FURTHER also - you lose all tax sheltered earnings that the withdrawn funds could have made if they were still in the retirement account.
If your credit is good, and you can make a reasonable down payment, you should be able to find an affordable (fixed!!) loan in today's market.
FE
November 16, 2008 12:18 p.m.
GOLO member since July 19, 2007
November 16, 2008 10:20 a.m.
GOLO member since August 22, 2007
November 16, 2008 10:15 a.m.
GOLO member since July 19, 2007
November 16, 2008 10:10 a.m.
GOLO member since August 22, 2007
November 16, 2008 10:05 a.m.
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