A foreclosure and a 401(k)

Question: I took money out of my 401K to get my home out of foreclosure because I lost my job. Do I have to pay taxes and penalty on that money? Howard, Bronx, NY

Answer; It all depends on your age. If you're under age 59 ½ you have to pay the 10% penalty and the amount you withdrew is subject to income taxes. If you're over 59 ½ you won't get socked with the penalty, but you will still owe income taxes.

About the author

Chris Farrell is the economics editor of Marketplace Money.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...