Keep in mind that a 401k is a retirement plan! It is intended for your retirement. So the IRS has designed the 401k withdrawal rules to make it hard for you to use the money for other purposes.
Normal withdrawals may begin after age 59 1/2. Normal income tax applies to these withdrawals.
It is possible to make a 401k hardship withdrawal. A hardship withdrawal is not a 401k loan. You cannot repay the money. The withdrawal will be subject to taxes, and possible penalties.
There are two types of 401k hardship withdrawals. The first is a financial hardship withdrawal. This type of hardship withdrawal is subject to income taxes and also 10% 401k early withdrawal penalties if you are under 59 1/2.
Some reasons you might be able to take a financial hardship withdrawal:
*To purchase a primary residence.
*To avoid foreclosure on or eviction from your primary home.
*To pay for college tuition that is dues within 12 months for you or a dependent.
*To pay medical expenses for you or a dependent that will not be reimbursed.
*To pay for funeral expenses.
*For repair of primary residence.
The second is a penalty-free withdrawal. This is also subject to income taxes, but there is no penalty.
Some reasons you might be able to withdraw money from your 401k penalty-free:
*If you become completely disabled.
*Debts from medical expenses are in excess of 7.5 percent of your adjusted gross income.
*You ordered by a court to surrender money to a former spouse, child, or dependent.
*You leave your job by being laid off, fired, quitting, or retiring early, and you are 55 or older, or it is within the year that you turn 55.
*You leave your job and set up a schedule of payments for roughly equal payments to last through your life expectancy. These payments must continue for at least 5 years or until you reach age 59 1/2 (whichever is longer).
Your employer is not required to offer either type of hardship withdrawl. So you will need to talk to your employer to find out if one of these is available to you.
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I was listening to a book on tape, and heard mention of hard money lenders. I had never heard of them before. They are a last resort source of money for investing in real estate.
Hard money funding is typically used to fund short term real estate investments. Hard money lenders will loan money to the investor at high interest rates then what you will find at a bank. Also they will loan you less money compared to what the property is valued (loan to value rates). The hard money lender will then assume a lien on the property. They will usually be in the 1st lien tier position, so in case of default, they are the first to be paid.
Often hard money loans are used to purchase real estate for the purpose of flipping. So even though the loan is at higher interest rate, it is only for short term. The borrower is likely to have to pay points as well.
A while back I was listening to a book on tape. They described this guy who travelled around the country on business. What he would do on his on during each trip was rent a car, drive out and look at properties. He would look at the city, or towns, and try to figure out which direction the city seemed to be growing in. And then he would buy some small lot in that area. Apparently he was pretty good because his real estate investments had risen in value, and he was very wealthy.
Every time I head out to Las Vegas, to visit my father in Pahrump, I see how much the area is growing, and I keep thinking about buying a small piece of Las Vegas investment property. I know property values have been rising fast out there. But I don’t know anything about real estate investing. I mean I could buy some little plot of land in Las Vegas, or in Pahrump as an investment, but chances are I would not make any money, or lose money as I don’t knwo what I am doing. I suppose I could get my father to help me some find some plot of land. He has bought and sold houses in the past, so would probably have a good idea about buying a piece of land.
Maybe I will just stick with the stock market. Land doesn’t grow, where a company can.