The Tennessean yesterday reported that some of us who are unemployed/underemployed are turning to our 401K savings to pay our mortgages. Since my husband and I have been unemployed for over a year now, we have turned to our savings account and a non-401K mutual fund account to pay on our mortgage, our only debt.
If I have to use our 401K and IRA retirement funds to save our home, we will. But why are we being penalized to do so? When 401Ks were new in the 80s, a saver could redeem the money to purchase a home without penalty. I did this to buy my first home.
We need emergency legislation to change this penalty tax on our money. I understand paying the federal taxes on this money, since federal tax was never paid when we earned the money. But is the 10% penalty necessary for those of us trying to save our homes?
