Do the same rules that apply to IRAs also apply to 401(k) withdrawals?
No, generally not. Although the IRS allows first-time buyers to make up to $10,000 in penalty-free withdrawals from their IRAs to make a down-payment on a home, it doesn’t provide the same tax break to people who tap their 401(k) retirement accounts. As a general rule, you cannot make any penalty-free withdrawals from a 401(k) company plan unless you have reached the age of 59 1/2 or leave the job and simply transfer all of the account’s assets into a new retirement program. But the good news is that the company may let you borrow against the equity in your 401(k). Federal law permits employers to allow their workers to borrow as much as 50 percent of the value of their individual plan, up to a limit of $50,000. Some employers allow such borrowing, but others do not. You need to ask the administrator of your company’s retirement plan, or someone in the human resources department, if you’re eligible for such a loan. Although 401(k) loans typically carry very low interest rates – sometim
