- quote -

Not necessary, he is already 55 and meets an exception to the
early withdrawal penalty.

- quote -

The first-time homebuyer exception (to the penalty) only
applies to IRA withdrawals, not 401K plans.

- quote -

Doubtful that the 401K plan would allow such a loan, as he
is no longer an employee of that employer.

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- quote -

Can you wait 4 1/2 more years?

You won't be able to avoid any taxes, but you will be able
to avoid the 10% early withdrawal penalty on $10,000. I
believe you can withdraw $10,000, penalty free, for a first
time home purchase. Note, the $10,000 is still taxable
income to you.

You should be able to borrow against the $17,000. However,
you are normally limited to $50,000 or 1/2 your vested
balance, whichever is less.

Josh

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

GV wrote:

- quote -

Did you terminate your previous job in the year you turned
55? Are the 401K funds still with the previous employer?

- quote -

The ONLY way to avoid taxes, would be to take a plan loan
for the amount needed (generally, no more than 50% of the
account balance). Since you have already terminated
employment with this employer, I doubt that they would make
such a loan.

- quote -

That is one option. Using the "first time homebuyer"
exception, would allow you to avoid the 10% early withdrawal
penalty on up to $10,000. The withdrawal would still be
subject to ordinary income tax.

- quote -

Another option. There is no "first time homebuyer" exception
for 401K withdrawals, but if you were 55 in the year you
terminated, you can can make penalty-free withdrawals of any
or all of the funds from your account. The withdrawal would
still be subject to ordinary income tax.

- quote -

I doubt if you could get it, since you no longer work for
the employer sponsoring your 401K plan.

- quote -

See the "Leave it as 401K" option above.

- quote -

Contact any financial institution or mutual fund company and
tell them that you want to open an IRA and transfer your
401K account to it. They will help you with the paperwork.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

I have to buy a house now. I am 55 and it will be my first
house. I have $17000 in 401K to use it for downpayment. I
just changed job

What do I have to do to avoid penalties and taxes?

Rollover to an IRA first?
Leave it as 401K?
Ask for a loan?
Make a withdrawal of full amount?
How do I open an IRA?

Thanks for the advise.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >