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Your 401K is one of the most powerful retirement investment vehicles you have, and the best way to make it grow is to keep investing and leave it untouched until you’re well into your 60s. But sometimes, life throw’s a curve ball and you need a lump sum to meet a major life expense – like purchasing your primary home. In other words, should you use a 401k withdrawal for home purchase?
Taking money from your 401K seems like a good choice – it’s your money, so why shouldn’t you use it? Most retirement blogs or guides you read warn strongly against 401K withdrawals, thanks to penalties and fees for tasking your money out early (this is a retirement account, after all). But is it always a bad choice? And what are your alternatives?
Instead of withdrawing money from your 401K for your down payment:
So how do you decide which is the best option for you? The first steps are to determine what your options really are:
Once you know what options are available to you, you need to sit down with a calculator to figure out which option is the best choice for your budget and your income.