I have a Roth 401k. Soon I will have enough debts paid off that I would like to start building up a down payment for a house. The house purchase will be my first, and will be over a year from now. (Likely 2-5 years.)

To me it seems that my Roth 401k is the perfect place to start investing for a house. I have seen several other questions asked about withdrawing funds from an IRA for a home purchase, but one unanswered question I have is this:

Can you also withdraw funds from a Roth 401k for a first time home purchase?

1 Answer 1


The rules are quite different. There is no special home purchase penalty-free withdrawal. In the case that your account has been open for five years, you can withdraw the principal (but not the earnings) without penalty. You may want to talk to a professional for further details.

The real question is: why do you want to borrow against your future to finance your present? Your down payment funds should come from another source than your retirement. Retirement funds should only be touched in the direst financial straights.

  • 4
    It sounds like the OP is looking for a place to stash the down payment, not necessarily to steal from retirement.
    – bstpierre
    Commented Mar 10, 2011 at 12:55
  • 1
    @bstpierre - if that's the case, then this question provides a set of excellent options. A Roth 401(k) would be somewhere down near my last pick, personally. If one wants to invest in funds with post-tax money for a house and deal with the volatility, an investment account with a place like Vanguard should work.
    – justkt
    Commented Mar 10, 2011 at 13:13
  • @bstpierre That's exactly what I'm looking for. And I was hoping to use an account I already have in place.
    – Stainsor
    Commented Mar 10, 2011 at 14:25
  • Thanks for the link. That does provide helpful insight. I'm still not sure what to go with though.
    – Stainsor
    Commented Mar 10, 2011 at 14:38
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    @Stainsor - a money market account or high yield savings account would be ideal. You incur a lot more risk with a bond or other investment vehicle.
    – justkt
    Commented Mar 10, 2011 at 15:22

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