Author Topic: Best way to access cash from my accounts  (Read 766 times)

SamiAnn

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Best way to access cash from my accounts
« on: January 18, 2022, 03:14:32 PM »
I am looking for some general advice on my situation.  If I need to access a large amount of money for a home down payment, and I have several options, what is the best combination based on losing potential investment gains vs up front taxes. The amount I need is around $150k- USD.

$60k in cash savings- I will probably use all of this.
$465k in 401k -I can take a $50k loan and pay it back over max 60 months if I choose- it has around 4% interest rate.
$63k in a Roth IRA- I think I can take max $35k out as my contributions without penalties, but this can't be replaced.
$142k in a brokerage account - Will have to use some of this, I think my tax rate will be 15%

I think this is all I have that is somewhat accessible.

SailingOnASmallSailboat

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Re: Best way to access cash from my accounts
« Reply #1 on: January 18, 2022, 03:35:57 PM »
$150k is 20% of $750k. That's a lot of house. The $150 is also a very large percentage of your non-retirement money.

My worry with using up all your cash reserves as well as a chunk out of your retirement savings is that when the house needs work, or you need to buy furniture for it, you will have nothing left to lean on.

This isn't answering your question in terms of how best to get your hands on a large amount of cash, sorry. It's more wondering out loud if you've thought through the ramifications of actually using up all that cash on a house.

SamiAnn

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Re: Best way to access cash from my accounts
« Reply #2 on: January 18, 2022, 05:25:38 PM »
You are right. The house is $950k. It’s partially an investment property and houses in my area are on a stratospheric rise. I didn’t want to complicate the question with a lot of extra info, but if it helps I can provide more.

Sibley

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Re: Best way to access cash from my accounts
« Reply #3 on: January 18, 2022, 08:53:38 PM »
You'll be pulling money from multiple accounts and there will be an addition to your AGI. Which may well bump you to the higher tax bracket, not 15%.

I'm not going to argue with you, but I am just going to mention that buying an investment property after the prices have jumped sky high seems like you're buying high. You want to buy low. You may want to throw all the details out there and see if people think its a bad idea. Between the higher value and the the large amount of your savings you have to pull, its not promising to me.

maizefolk

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Re: Best way to access cash from my accounts
« Reply #4 on: January 18, 2022, 11:18:37 PM »
If you're going to do this, use some but not all of your cash from your reserve and get the rest from liquidating the majority of your brokerage account.

You don't mention what your cost basis is in the brokerage account, but even if it's 2/3rds gains and only 1/3 cost basis and you need $120k after using $30k of cash, we're still talking only $12k in capital gains taxes, not a life changing amount of money.

Pulling contributions out of your Roth account gives up that potential for long term tax free growth forever. A 401k loan just puts extra financial pressure on you after you've bought the house and can lead to sticky situations if (for example) you lose your job, triggering a need to repay the loan right away or have it recharacterized as a distribution with associated income tax consequences.

Now in your shoes I wouldn't be buying million dollar home that is half again my entire net worth. I particularly would be buying a million dollar home that was half again my entire net work as an investment property. But you didn't as my/our opinion on whether not not it was a good thing to do, just the least bad way to to go about doing this thing.

SamiAnn

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Re: Best way to access cash from my accounts
« Reply #5 on: January 19, 2022, 09:30:36 AM »
Thank you, I posted the details of the house on the Real Estate board.

Giving me alot to think about!