I should be getting half of the 401K when the divorce is final.
Rather than putting in a ROTH or something, can I use that money as a down payment on a house for me and the kids?
- Sandi B.
Great question and the answer is “Yes.” You can ask that instead of the 401(k) funds being rolled into a traditional IRA it could go to you so you can use it for the house.
But you will owe taxes on that, if you live in a state with a state tax, That means around 1/3 of the funds will go to income taxes. They will withhold some of the taxes, and the rest will be owed on your tax return.
So be sure you consider that information before jumping into a new home purchase.