401K withdrawal to pay for car in retirement
Hi Terry, I am currently leasing my car lease is up 4/7 I am 76 still working part time I am trying to decide either to buy the car or lease another one? I could take a loan on my 401k I am in pretty good health. payments on the loan would be a lot less then my lease payment and my car is a 2018 Hyundai has only 15 thousand miles and in great shape? what do you think. thanks, geri
Terry Says
It’s always a bit more expensive to buy a car off lease, but in this case you know it is low-mileage, and in great condition. In fact, I bought the care I am driving now five years ago, off my lease.
Remember if you withdraw money to pay for the car, the amount will be added to your ordinary income and you will owe taxes on it. But this is what retirement funds are meant for — and keep working as long as you can. If you are still working you can make a contribution to your 40l(k) (or an IRA) — and that deduction will help offset the taxes on the withdrawal.