Can I use 401k Hardship Withdrawal if I have money in the bank?

View your credit file based on any of the UK credit reference agencies, or all three at once
LifeLock is the only Identity Theft Prevention Solution backed by a one-million dollar guarantee!Click here to get a 10% discount.

LifeLock Identity Theft Prevention - Save 10%

I would like to buy a house, say for 100K. I want to put 20% down and I do have 20K in my checking account. But I would rather take 26K (20K minus tax and penalties) out of my 401K even if I can afford it.

JPMorgan and IRS say I can take out (Not borrow, you don't have to pay it back) money out of my 401K under the "Hardship Withdrawal" for the downpayment only. Will I qualify since I could afford the 20K downpayment with my checking account? In other words, must I legally pay off my downpayment with my cash at hand before dipping into my 401k?

I can't find any of these details online. I already know all the pitfalls of a Hardship Withdrawal versus loans etc.

Can I use 401k Hardship Withdrawal if I have money in the bank?

A hardship withdraw has nothing to do with outside moneys. JPMorgan will have no way to find out if you have money inside your banking account. However, I would try not to take a hardship out of your 401K unless you ABSOLULTY need the money to put down on the house. You will lose 10% right off the top, and then have to pay standard income on the moneys. Also, when taking out 26K or 32500 (you are allowed to gross up the amount by 25% and withhold 20% to cover some of your taxes) you might be raising your tax bracket, and you might owe even more tax. I would talk to a CPA before taking out any money, but just remember this should be a last resort. You don鈥檛 want to hinder you retirement goals.

FirstPrevious12 Next End

Can I use 401k Hardship Withdrawal if I have money in the bank?

Topic