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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4511
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I have a question regarding withdrawl from a 401k or ira,

Customer Question

JA: Hi. How can we help?
Customer: I have a question regarding withdrawl from a 401k or ira
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: ok, I'll try to make it short
JA: Is there anything else important you think the Accountant should know?
Customer: I purchased a house at the end of 2014. I took a loan against my 401k to aid in the down payment. I recently got laid off and would like to pay off that particular loan. I am not in foreclosure which would classify as a hardship situation but want to avoid that altogether. Can I payoff that 401k loan under the the purchase of a permanent residence stipulation to avoid paying penalties even though the purchase was made 2014?
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.

Hi from Just Answer. I'mCustomer

If you were laid off less than two months ago, you can repay with no penalty.

A hardship withdrawal could be used now, after the loss of your job, and those funds used to repay the loan balance. This must be within the two month window I mentioned before.

It is too late to re-characterize your loan as a permanent residence loan, as the transaction occurred in 2014.

Thanks for asking at Just Answer. Positive feedback using our rating scale is appreciated. I'mCustomer