Shall we raid out our 401Ks completely (we can borrow 50% of them) so we can bring it to 417K? I have a funny feeling that HLS would agree with that strategy…[/quote]
I am not a fan of raiding 401k for a large percentage…
Here’s a true story that convinced me.
A friend /former roommate was borrowing form her 401k for her down payment… she was laid off 2 days before closing. There had been rumors that layoffs were coming and she confronted her boss – not wanting to close on a house and be laid off the next day. An hour later she was meeting with the head of HR getting laid off a few days before the mass cut.
She would have been in the situation of having to come up with her 401k dollars or pay huge IRS penalties.
It sucked for the sellers – but she called her realtor and her lender and said – hey, the offer was contingent on financing and financing was contingent on my income – I now have none…
The lender said they’d still issue the loan… she said PLEASE DON’T and they agreed… So she was able to back out of the purchase at literally the last minute.
(Fortunately her landlady (me) was willing to extend her lease.)
Based on that- I’d be nervous borrowing too much from the 401k – the 10% penalty on top of the income tax if you don’t pay it back… and you have to pay it back if you change jobs.
