401k question
Spouse A is no longer working, but Spouse B is working. Is it possible to roll Spouse A’s 401k from prior employer into Spouse B’s 401k with a separate employer? If possible, the couple would like to borrow against the combined 401k’s to purchase a house. Since Spouse A is no longer employed, Spouse A is not eligible to borrow against Spouse A’s 401k, and Spouse B’s 401k has only a small balance. The couple has 90% of the purchase price saved in cash, and would like to borrow the balance ($50k) from their 401k to avoid dealing with a bank.
Permalink Submitted by Alan Spross on Mon, 2008-09-08 23:28
No, that is not possible as long as they are both alive. Retirement accounts are not joint accounts, they are individual and separate accounts and cannot be moved into and out of other’s accounts including those of spouses.
I would not want to have to deal with a large bank now either since they are gone from reckless to gun shy in their loan underwriting. However, there may be other well run sources of mortgage money such as a local credit union or community bank. Of course, if they do not want a loan at all, they could roll the large 401k over to an IRA and take a taxable distribution from the IRA. Perhaps A is 59.5 and there would be no penalty, or if this is a first home, 10,000 could be penalty exempt.
Or – perhaps this is in a market that will be 50,000 lower in a few months and they won’t need a loan……….
Permalink Submitted by Thankyou Lily on Tue, 2008-09-09 02:24
Thanks for the response. I was pretty sure the answer was no, but wanted to run it by the forum.