Comment Re:For us (obviously inferior) non-Americans... (Score 1) 496
401(k) The maximum pre-income tax that can be placed annually in a 401(k) was ~10500$ in 2000. The amount has gone up over the last 2 years, maybe ~11500$. Secondly, this maximum is either this amount or 15% of your gross salary (which ever is lowest).
However, you can also deposit post-income tax up to (I think) 10% of your salary (in which case, assuming you had a salary in the 400K, you could deposit this 40000$).
Getting money out early of your 401(k) is heavily penalized (i.e. pay income tax plus 20% penalty or something to that effect). However you can make loans against your 401(k), the nice aspect here is that since you're making a loan against yourself, the interest you pay is returned into the 401(k) (however your 401(k) ins't growing in the mean time since you temporarily pulled out the money). If you need money to, say, by a car, your bank would probably loan you 10K$ with interest of 6.5%~7.5%; this interest (which over 3 years might reach 2.5K~3K) is lost. Were you to make a loan against your 401(k); in the current economic situation where your 401(k) might bring in 0~5%; you would lose this return but would save the interest; it's worth doing the calculations.
Yes, you can make a loan against your 401(K) to buy a house. You do have to pay this loan back though since you haven't, officially, pulled out the money from the 401(k). Defaulting on the loan is treated as equivalent to pulling out the money and you'll have to pay the penalty.
The IRS (I think) has all of these details on their web site. Worth checking out.
However, you can also deposit post-income tax up to (I think) 10% of your salary (in which case, assuming you had a salary in the 400K, you could deposit this 40000$).
Getting money out early of your 401(k) is heavily penalized (i.e. pay income tax plus 20% penalty or something to that effect). However you can make loans against your 401(k), the nice aspect here is that since you're making a loan against yourself, the interest you pay is returned into the 401(k) (however your 401(k) ins't growing in the mean time since you temporarily pulled out the money). If you need money to, say, by a car, your bank would probably loan you 10K$ with interest of 6.5%~7.5%; this interest (which over 3 years might reach 2.5K~3K) is lost. Were you to make a loan against your 401(k); in the current economic situation where your 401(k) might bring in 0~5%; you would lose this return but would save the interest; it's worth doing the calculations.
Yes, you can make a loan against your 401(K) to buy a house. You do have to pay this loan back though since you haven't, officially, pulled out the money from the 401(k). Defaulting on the loan is treated as equivalent to pulling out the money and you'll have to pay the penalty.
The IRS (I think) has all of these details on their web site. Worth checking out.
