Rollover 401K or Taxable Income to Invest?

[Alexander Araniba]

Hi BP,

I worked at a small business and had a 401k. And at the beginning of January, 2019 I started a new job at a bigger company. I am now on the fence of rolling over my money from the old investment company to the new one? Or if I should take it as a taxable income and use those funds towards the purchase of a rental property?

Breakdown:

I have about $17k, and after hearing the breakdown of what the IRS & State will tax, I believe it will be a little over $13k I will receive. And next year, I will be charged an additional 10% for early withdrawal. So, total will be a little over $10k. Additionally, there may be a possibility that I might get more. The old investment company said that they see on their system that I am entitled to 40% of the profit sharing. But they would have to confirm with my old company if that's correct or if I am entitled to the full 100%. 

I loaned $7k in 2017 to use towards the purchase of our 1st home. I have only brought down the balance to about $5k. So, I'll be taking a hit on this no matter what. The invesment company told me I can either A) pay it in full to avoid getting taxed or B) take the remaining balance as a taxable income. UNLESS some of you know of a loop hole that will allow me to not get this charged as a taxable income?

Present:

With this new company, if I roll over, I won't get charged anything. Only the $5k+ I mentioned above for the loan I got towards purchasing our home. 

Dilemma:

I'm 34, still somewhat "young." And prior to this, my wife and I have been researching and discussing a lot about buying our 1st rental property this year (2019). Our goal is to save up about $15k-$20k. So, if I took this taxable income, we will already be close to meeting our goal sooner than later. And with my new job, I got an instant 30% boost in my income. 

I am and have been working on increasing my FICO. Currently, I have it now at 650. I am still paying down my 2 CC's and I should be able to pay them off by next month. I'm hoping it'll boost my FICO closer to 700 or more. 

So, I am not sure what to do here. Should I rollover the funds or should I take a hit and use it towards an investment property?