Access Leading Tax Experts And Technology
In Our Global Digital Marketplace

Please Type Topic Into Search Bar

My brother-in-law worked at shuffle master for 10 years and at 65 has accumulated a 401k that he would like to liquidate in order buy a home. Will he have to pay a penalty, will he be taxed at ordinary income rates or will this be considered a long term capital gain? And, does it matter what he does with the money?

401K Real Estate
TaxConnections Members... Answer This Question Want To be One of Our Tax Experts? Register Here

Tax Professional Answers

User Photo
William Keats
He can liquidate the 401K at 65 without a penalty, if the trustee plan allows the withdrawl. If he is not retiring, he should leave the 401K alone, and take a mortgage. Mortgage rates are low right now. Some plans allow the employee to take a loan, repayable within 5 years, as long as he is working. Maximum loan normally $50,000. This could be used for downpayment.
If he does make a distribution, the amount would be taxable as ordinary income. Trustee would withhold 20% for Federal tax.
Leave a Comment 459 weeks ago


View/Select our Current List of Tax Topics

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Previous PageNext Page

Contact Us Today