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401k money to pay off mortgage?
Old 11-04-2018, 05:31 PM   #1
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401k money to pay off mortgage?

I am retiring in March with $400,000 in 401k. Owe about $33,000 on my mortgage. Should I take the money out of the 401k and pay it off? I don't have enough in my regular accounts pay it off. What do you folks think> I think the interest rate is about 5.8%.
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Old 11-04-2018, 05:36 PM   #2
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Not enough info but I would say probably not.

In order to know for sure:

Are you at least 59.5 to take it with no penalty?
How else do you plan to pay it if not via the 401k?
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Old 11-04-2018, 05:44 PM   #3
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What do you folks think> I think the interest rate is about 5.8%.
I think you should learn the actual interest rate before you try to make this decision.
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Old 11-04-2018, 06:11 PM   #4
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If you only owe $33k on it, you must be within a few years of paying it off - no?

How many years remain on it if you were to continue paying it as scheduled?
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Old 11-04-2018, 06:14 PM   #5
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Can't say what I would without a lot more information about your finances and plans. In most scenarios, I would not do this.
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Old 11-04-2018, 06:19 PM   #6
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Yes, no, maybe... Not enough info to give a good answer.
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Old 11-04-2018, 06:45 PM   #7
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I agree with the above... not enough info. But one question jumps out. If you don't have 33k outside of the 401k, then what are you using to pay for life?

You really need to look at your sources for cash and the cost (interest or taxes) to use your own money. It would be scary to use 401k $ if you had to pay a penalty and tax to use it.
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Old 11-04-2018, 06:57 PM   #8
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Quote:
Originally Posted by LXEX55 View Post
I am retiring in March with $400,000 in 401k. Owe about $33,000 on my mortgage. Should I take the money out of the 401k and pay it off? I don't have enough in my regular accounts pay it off. What do you folks think> I think the interest rate is about 5.8%.
Are you over 59 1/2? What tax bracket will you be in when you do the withdrawal?
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Old 11-04-2018, 09:48 PM   #9
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If you are at least 59.5 now, then pay off the measly 33k with your 401k! You donít need to wait till you retire but you do need to be 59.5 years old at time of withdrawal. Also 5.8% is a high rate so youíll be gaining that much by paying off.
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Old 11-04-2018, 09:58 PM   #10
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If you are at least 59.5 now, then pay off the measly 33k with your 401k! You don’t need to wait till you retire but you do need to be 59.5 years old at time of withdrawal. Also 5.8% is a high rate so you’ll be gaining that much by paying off.
Not really "gaining" that much - depends on what he would have earned by keeping his $$ in his 401K. If he would have made 6% he then basically broke even. No crystal ball so can't really say.

Benefit I see is if house is nearly paid off, and if OP is looking at ACA, paying off the mortgage may free up some room for MAGI for subsidy depending on how OP is funding his retirement $$$.
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401k money to pay off mortgage?
Old 11-04-2018, 11:00 PM   #11
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401k money to pay off mortgage?

I would not. (Unless your interest rate is above 10% and you canít accelerate it by other means - then maybe)
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