Key insights
- The post discusses the potential tax implications of withdrawing from a 401k to fund a home construction project. While the poster recognizes the potential negative impact of such a decision, the family dynamic prevents them from offering advice. The market influence is slightly negative as it highlights a potential trend of individuals making financially unsound decisions due to short-term market anxieties, potentially impacting long-term investment strategies.
I work in public accounting on the audit side, but during my time of also studying for the CPA exams I have learned and researched tax laws and implications of such laws. I just found out from my mom, that her sister, who is about 64 is going to eventually sell their home while currently building one. well apparently the 1st payment is coming up on the build and it’s going to be close to $60k, and she told my mom that “she will just draw from her 401k because the stock market isn’t doing so hot right now and it’s not up anyways.” I looked at my mom and said “I know you can’t tell her what to do with her money, but you can’t you just say that’s not the wisest idea?” drawing that much on her retirement account will result in a large tax burden for this year and I don’t think she fully realizes that. and in response I just got told that even though my mom is her sister, it would be so wrong for my mom to mention such thing.
Maybe I’m wrong on my thought process here, what do you all think?