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August 21, 20210

401K Withdrawal

401k accounts are designed specifically for retirement for when a person is roughly 60 years old. Borrowing a loan or withdrawing money out of a 401k account prematurely has different consequences. With a WITHDRAWAL, the funds do not need to be paid back, no issues if you change or lose your job, new contributions can be made. Income tax will be charged on the amount withdrawn, and the amount taken out can’t surpass the home price. 401k LOANS must be repaid with interest, not taxable or tax penalty if repaid, loan amount limit of $50,000.00 and might need to be paid back if one changes or loses their jobs. Another option a homebuyer has is to use their IRA account. First-time home buyers with Independent Retirement Accounts (IRAs) are legally allowed to withdraw up to $10,000 towards a home loan. This $10,000.00 is the highest amount allowed to be taken out within the account’s lifetime without the early withdrawal penalty. One can examine their finances and future to see what makes sense to them in terms of homeownership.

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