[quote=scaredycat]i certainly think it’s a better bet to borrow half of it to put ina house than to put half int he market.[/quote]
I’m with scaredy on this one.
Most 401k plans allow you to borrow 50% of your 401k balance up to a loan amount of 50K.
If you have 100K in a 401k, take a loan for 50k, and leaves the rest in a short-term cash position in the IRA, you end up paying about 3 or 4% for the loaned money (about 2k per year or less).
If you withdraw the money, you pay your federal and state marginal tax rates (could easily be 40% combined), plus a 10% penalty. So the expense is about 50K. Also, large withdraws increase income and induce phase outs of many tax credits, deductions, and may put you into AMT, thus increasing your tax bill more than just the tax on the withdrawal itself.
Your hot new investment needs to double just to get back to break-even.
