[Kevin]

No, but many 401k plans allow for a loan of up to $50k that you pay yourself the interest and that is what I have done in the past.

No penalty, just lose out on market movement with the money out of the account, but in the right investment you can make more.

[David]

More details needed…
1. Is this a retirement account you will be penalized for taking the money out of? Or is it just a taxable account?

2. What are the numbers on the house? Cost and how much are you going to make from the house hack?

3. What does your overall finances look like? Especially cash for when things break in the house?

These are top-of-the-head questions I would want to know before even giving the slightest opinion.

[William]

How are you figuring that to be 20% tax? An early distribution is taxed at marginal rates (which I assume is at least 22%) with an additional 10% early withdrawal penalty..

your looking at appx 32%, maybe even 34% tax for that distribution.

Would you buy the house if it cost 1/3 more than the market is pricing out now?

I definitely wouldn’t make that kind of purchase.

[Sean]

No. And in case you don’t know, a lot of times the 401k company will do a withholding on the distributions, and that amount is 20%, but that isn’t the actual tax you pay.

And it’s unlikely that you’re actually at a 20% tax rate.

So just make sure you know how much your tax bill will actually be if you do decide to do an early withdrawal.

[Rick]

Me now, no.
Me 10 years ago, maybe
Me 20 years ago, yes all day every day.

A highly leveraged asset that others pay for?

Perfect for younger me. Tax hit sucks and I would have wished it wasn’t happening but the upside takes care of that.

Now it MUST be a property that makes sense as a rental and not some primary residence you just wanna have roommates live with you.

This is where most people make a mistake. Don’t.

[Abigail]

No. You can however hold real estate in a solo 401k. I would do a very careful analysis before committing to such a thing, since all related expenses must also come from the 401k.

[Tyler]

Wealthiest people I know personally did it through real estate. Not retirement accounts.

But they used the retirement accounts after they started making money to have another tax shelter.

Take that however way you want.

[Kendal]

Pay the PMI until you’re able to drop it, sounds like a better option than a 20% tax.

[Paul]

Probably not but maybe if retirement were overfunded and there were no penalty.

[Author]

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