Hi, how can I retroactively use my 401k to pay for my first house?

Question

I've heard that there's a penalty for early withdrawl, so I didn't use my 4091k to buy my first house.  Now that I've borrowed the first payments to buy my house and my friends need the money back.  Are there ways I can cash out on the 401k without penalty and still have the advantage of a first time home buyer?
thanks
sincerely
Joe

Anonymous · Accepted Answer

No...   You can't cash out your 401k without a penalty unless you can prove a hardship.

You can take a loan out of your 401k without penalty...   You will have to pay it back with interest....    The good thing is that you are basically paying yourself because all the money, interest included, will go back into your account as you pay it back.

If you default and fail to pay it back you will be hit with taxes and penalties.

digdowndeepnseattle · Answer

can't do it retroactive.  In order for it to be a hardship it would have to be to purchase the home and not to pay off a loan.  As far as your 401k is concerned you could be paying off a gambling debt....I'm not being glib but your plan needs official documentation to justify making this distribution.  

Try another vehicle first...if you can't find any other means to get the cash then see if a 401k loan is an option. pay it off as quickly as you can.

Anonymous · Answer

go ahead cash it out !
you will lose about 400$ per 1000$ 
see how good a deal that is?

suggest u get 2 more pt/tm jobs and pay 'friend ' off fast or get house on market today.

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Hi, how can I retroactively use my 401k to pay for my first house?

3 Answers