distribution – damage to primary residence
401(k) participant, 40, has significant damage to his primary residence. He is looking way to access his retirement assets w/o being subject to the early distribution penalty. There are methods to access assets although in most cases a penalty would apply (a loan being an exception) He could (assuming plan allows) take a hardship – although the penalty would continue to apply. Another option (again if the plan allows) is 72(t)
Same fact pattern as above – any difference if the assets are in a T-IRA?
Thank you
Permalink Submitted by Alan - IRA critic on Tue, 2016-09-27 19:22
An IRA provides inferior options in this scenario. There are no loans, other than one 60 day rollover per year, there is no penalty exception for damages to a home, and a 72t is not really applicable in this situation because the distributions are rigid and must continue for the longer of 5 years or 59.5, and for a 40 year old for 19 years. A 401k loan would really be the best option. Or perhaps leave the retirement plans alone and get a real estate loan.