I'm curious if I want to withdraw the maximum $10,000 from a 401k that allows a loan to be taken, can I do this from 2 separate accounts? Meaning, if I have 2 separate 401k accounts, can each count as 2 different withdraws of $10,000 so I actually get $20K?
Is the rule otherwise $10,000 max no matter how many separate accounts you use?
Thanks in advance!
Are you referring to the exemption from the 10% Early Withdrawal Penalty for bring a new home buyer? It is 10,000 max per spouse BUT it is only from IRA accounts, not 401K.
Yes, a 401k but my personal 401k is not company sponsored. So the is no 'loan' option just simply a withdraw. Not a hardship, just simply a withdraw.
I do have a company-sponsored 401k but I believe that is also not an IRA.
401K plans are not IRA. Totally different things. Are you sure it's a 401K? If it's not in a company plan?
I have 2 accounts, a Roth IRA and a Rollover IRA. So when I say 401K I'm speaking of my personal Rollover IRA.
My apologies.
That Rollover IRA is where most of all of the money is held, it was set up long ago.
Oh ok. So it's not a 401K. Yes you can avoid the penalty on up to 10,000 max.
see about IRA distributions
Perfect.
So for my actual work 401K to avoid the penalties I just need to make sure I do a loan correct?
Yes if you can take a loan. A loan is not a distribution and is not taxable. You don't get a 1099R for loans and don't report loans on your tax return.
One last question hopefully : )
Since I'm using this for a home purchase, when asked about taking out taxes is that something I should still do or is that not needed since I will qualify for the exemption?
Yes if you take a withdrawal and not a loan it will still be taxable income so you should have taxes taken out. The exemption is only for the 10% Early Withdrawal Penalty. And be careful, it will add to your income and may push you into a higher tax bracket. You can lose up to 50% for taxes (federal & state) and penalties.