![]() ![]() ![]() He is generally against using retirement money for anything other than retirement, but “life intervenes,” he said. ![]() Or a younger worker who has made a lot on stock funds in their 401(k) in recent years might want to temporarily tap that money to establish themselves as a homeowner.Ĭhristopher Van Slyke, an Austin, Texas, fee-only adviser, tells his clients that if they want to buy a house, they should consider contributing less to their retirement accounts while they accumulate a down payment in savings. To buy it, they might have to sell investments and eat a sizeable capital gains tax. Some workers closer to retirement might find themselves retirement-plan heavy with their eyes on a retirement home. As any homeowner would attest, the boiler will break and the roof will leak when they least expect it.Īnd a worker who borrows from his 401(k) and then leaves his job usually has to pay back the loan within a few weeks or face a big tax hit as he is forced to treat the loan as a distribution.įurthermore, a mortgage lender might not qualify you for a loan if you had to borrow the down payment from a parent or someone else, but would if you “were just borrowing from yourself,” said Jordan. To be sure, cash-poor workers who borrow to the max to buy a house can get into trouble quickly if they don’t have the reserves to handle emergencies. Millennials who borrow an average of 37 percent of their accounts, or $17,100, might particularly find the loan “a stretch for people who are also taking on a mortgage and might be saddled with student debt,” Fidelity said. The investment firm said workers who borrowed from their 401(k)s for home purchases tended to borrow more - $23,500 on average - and could be putting themselves at risk of reducing or stopping their retirement contributions. “Over the past year alone, more than 27,000 investors took loans specifically for the purchase of a home,” said Fidelity, which looked at data from workplace retirement plans it runs. A home "SOLD" sign hangs in front of a house in Vienna, on the day the National Association of Realtors issues its Pending Home Sales for February report, in Virginia March 27, 2014. ![]()
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