Using a 401k to help with down payment?

[Phil T.]

Hi!  I've been interested in purchasing my first rental for a while, and am trying to educate myself as much as I can on the process.  What do you guys think about using my wife's 401k to help with the down payment on a rental?  She has about $10-11k in an old 401k, and has no intentions of going back into a conventional job any time in the near future, where she would be contributing to it again. It looks like the 401k would be worth $6500-7000 after taxes and penalties.   I know the taxes and penalties would be steep, but I can't help but think it might be worth it. Or, should I keep the 401k where it is and have a little more for retirement?  

Any thoughts would be appreciated!  

[Brandon Battle]

If we were talking about a 100 grand with a 20 grand penalty,I would advise you to roll it into a self directed IRA and invest the money with zero tax penalties to grow the IRA.But to me,10 grand isn't much and the penalty is rather small in comparison so personally,I would advise ending the the fund and taking the penalty.Unless of course you are trying to grow the fund instead of enjoying the profits now instead of after retirement.