Accessing 401K after Maxing Out on Loan

[Benedict Reyes]

We took our 50K maximum loan allowance from my wife’s 401K for d/p of two properties we bought last year. We’re hoping to access some more of the money for d/p of future deals. Any input on this is very much appreciated. Thank you!

[Thomas Sulz]

Hi Benedict,

I am a tax consultant and although 401k's are not an area I specialize in, I am almost certain that if you have already taken out a 50k loan then you will not be able to take out another. The IRS only allows up to a maximum of $50,000 to be taken out of your 401k for a loan.

You can always withdraw the money out of your 401k but you will obviously be hit with penalties. This may not be the most ideal way of accessing the money but if the gains from your REIs are expected to outweigh the loss your going to take in penalties then it may be an option you want to consider.