401k Withdrawal

My wife has been out of work for a few years. Is there any way she can withdraw from her 401k without penalties?

What is her age? and 20 characters.

If she is under 59.5 she can roll it into an IRA and make penalty free withdrawals under a SEPP plan. There are a number of rules that need to be followed, so read very carefully.


20 characters ??

That is tough. You would have to meet the hardship rules under the IRS. Maybe someone that is more familiar with that can tell you how to do that otherwise I would talk to a tax professional. There are some things you can take the money out for if the plan allows it but I would make sure I had all my ducks in a row before I did it.


The SEPP aka 72t withdrawal plan is available. I did one at age 53. Once begun you must continue the program until at least age 59-1/2 (or face penalties). Payments are designed to last for your life expectancy often 2 or 3% of the ira balance per year.


There’s a minimal number of characters for both the title of a post and it’s content in the new “improved” TMF.



For a 44 year old, and the current valve of 120% of the Applicable Federal Rate (5.40%), you’d be able to draw $1,830/yr from a $100,000 IRA.

here’s a good calculator.

SEPP Distribution Calculator – 72tNET


Ok so full disclosure. My wife really wants a built in pool. I do think our 3 1/2 yo daughter will enjoy it and continue to in the later years. I would too but I’m not willing to spend the money and create more debt. Her opinion( mine too) is a nice built in pool or nothing…lol. She said she would pay for it and take the money out of het 401k. I know , it’s a bad decision due ot the panelties. If it matters, I do have a fairly nice nest egg, About $1.1M in my 401k, I will have a retirement pension and we have paid our debt down. We own (2) houses. One worth $700k and the other about $620k both with mortgages of about $250k.

Individual decisions all around, of course.

If you can, objectively go through ALL of your options.

Budget $150/mo additional expense with the pool while operating as well.


  • YMCA or similar membership
  • Getting a favorable financing deal from your pool contractor (they may surprise you based on “lower than expected sales”)
  • Taking a loan and paying it down (painful, but better in the long run for you, maybe)
  • Taking a loan out against the 401K (less painful and you get to keep the interest after you pay it back)

Find a way to “work harder” now to afford this luxury (it is, and be honest) and not compromise later in life benefits from your nest egg.

I have a saltwater pool open year 'round. My monthly expenses are more than $350 due to significant additional amenity associated with it. It’s not cheap. It will NEVER be cheap. I set aside an additional $100K to fund it’s purchase.

If I never had the pool, my retirement fund would be more than $400,000 higher in value today (purchased in 2017).

My wife uses ours daily for physical therapy in lieu of going to a PT multiple times per week.


Why not just finance it rather than take the hit on the 401k. Think about it, the interest rates would be less than the penalty and taxes you would have to pay. Buckle down and pay it off early. Since it benefits the whole family I wouldn’t put the burden on your wife to pay for it.



That will look a lot smaller when the day comes when you have to live off it. Pensions and SS are fine, but you will need more. And consider that maybe 15 years from now your daughter will be in college*.

*Just one of the many ways a daughter can get expensive! :sunglasses:

First get estimates for the project. I’ve read that pool install prices have gone through the roof in recent years. Like easily over $100k all said and done. I highly recommend a salt water system, it requires less maintenance, much fewer chemicals, and is way, way, way better for the skin and hair of the bathers. And it isn’t particularly expensive as part of the overall project.

Now as far as coming up with the money, using 401k money really isn’t the right choice (in almost all circumstances). That’s because you won’t get as much money out of the 401k as from elsewhere assuming similar costs. You are quite likely in the 24% tax bracket, so when you withdraw $40k from the 401k, you will pay 24% tax plus 10% penalty and end up with $26.4k. But $26.4k will not be close to enough to fund this thing. It’ll probably be close to $100k all in. So you will need to withdraw over $150k from the 401k. And to make matters worse, this will push some of the withdrawal into the 32% tax bracket, so on that additional amount, you will pay 32% tax plus 10% penalty, or 42% total. It’s just not worth it.

Luckily you have other choices:

  1. With two homes, you have to decide which one to install the pool at. I assume it will be the one you spend most summer months in. You can take a home equity loan on that one and install the pool.
  2. You can sell one of the homes, and use the money to build the pool at the other home. The remaining money can be invested as you please.
  3. a. If you have taxable investments, you can take a margin loan (check rates at your broker, and they can be negotiated) against those investments.
  4. b. If the company holding your investments has an alternative way to get a lower interest loan for such things, you might be able to use that.

Don’t forget in addition to the 10% penalty, one also must pay ordinary income taxes. Pulling 100kish quite possibly will trigger higher income tax bracket. I have a pull (bought house with it) and it’s not cheap to run: probably MIN $30/mo on chemicals to balance pool, seems like every spring, something needs replacing (filters next year, 2 years ago salt cell), and higher electric bill from running pump. I’m in IL and costs vary by region but my neighbor looked at getting a pool last year: minimum 200k for the inground pool and subsequent landscaping.

You have a 3 year old. Can you start budgeting now, save some dough and start building in when she’s 6 or 7? A child that age will get way more use than a toddler.

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