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11-18-2014, 10:48 AM
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#29
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Senior Member
Rexhall Owners Group
Join Date: Dec 2010
Location: L.A.
Posts: 412
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Lot's of opinions here. Some from actual financial advisors, some from others who appear to have done or at least researched what you plan on doing. But mostly input from those that are basing their opinions on their personal financial situation. The only thing that matters here is your financial situation.
I see from your prior posts, that you thinking of buying a new motorhome. Also, and I may have missed it, you and your wife are not experienced RVers. Others have done exactly what you are planning on doing and then find out, after making a huge investment, that they just don't like it. I'm not referring to using funds from a 401K or IRA, I'm talking about taking a plunge in a very big pool when you're not sure you like swimming.
Consider the total amount of money it takes to get into the motorhome. Don't forget the sales tax, the extended warranty, the towing equipment, etc, etc. etc.. Let's say you have a total outlay of $30 - $35,000 to get into a $100,000 motorhome that after the first trip, you're not totally happy with. Honestly, some of them are not much fun to drive. Take a good look at the Cheap Handling Fix thread. Fixing stability problems can be costly. Add that to you're going in cost.
Now if you don't like RVing and decide to sell after one year. Your brand new $125,000 RV that you paid a rock bottom price of $100,000 for, will be worth about $80,000. So in addition to all the money you've paid to get into the motorhome and the monthly payments for the first year, you now have a motorhome that may not bring enough cash to pay off the loan balance. That could be a pretty ugly situation for someone who's focusing on the interest cost of a 401K loan vs financing through a bank.
That said, if your financial situation is such that you're assured a decent retirement income and have a place to hang your hat that doesn't depreciate like brand new motorhome, just do it. It's a great lifestyle.
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11-22-2014, 09:07 AM
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#30
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Senior Member
Ford Super Duty Owner
Join Date: Nov 2013
Posts: 206
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Never borrow from your 401K. The money you borrow does nothing and you pay yourself interest and when the stock market goes up 20% you just lost all that money. I am retired and could buy a half dozen fancy MH's but I chose not to touch mine and buy a $30,000 rig. It took us a year to find the perfect one but we eventually found someone that wanted out. Book value on ours was $47,000. I am 57 and the one I have will do just fine until I hit retirement age and get a raise.
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01-14-2015, 06:08 PM
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#31
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Senior Member
Join Date: Jan 2014
Posts: 983
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401k to buy rv
another option is to get loan from credit union for RV then TAKE MONTHLY WITHDRAWALS instead of a lump sum withdrawal from your 401k to cover your loan. look at what is the yearly growth % of 401k balance is and what you would lose on lump sum withdrawal. make sure you consult a tax person before you take any action....just my opinion..
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01-14-2015, 06:20 PM
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#32
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Member
Join Date: Jan 2015
Location: Baconfield, CA
Posts: 43
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I borrowed against my 401 on my last 5er, and they just deduct a payment from my check with no penalties, until paid off. Pretty sweet deal if you have that option. I have done 2 loans like that. but once you borrow, you can't borrow again until the loan is paid off.
At least in my case.
__________________
1992 THOR 30 FT PINNACLE
2015 PACE AMERICAN 24 FT. V-NOSE
LOTSA TOYS
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01-14-2015, 07:49 PM
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#33
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Senior Member
Join Date: Feb 2014
Location: Kentucky
Posts: 437
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I would not raid my retirement to buy an RV that loses thousands of dollars per year in depreciation.
I would buy a nice used RV, that has already depreciated a bunch, and avoid the pension raiding idea.
After you drive them off the lot they are used vehicles anyway.
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01-14-2015, 08:09 PM
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#34
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Senior Member
Country Coach Owners Club Solo Rvers Club iRV2 No Limits Club
Join Date: May 2011
Location: Vancouver, WA
Posts: 37,725
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Quote:
Originally Posted by sknight
Or don't upgrade as much. Sell what you have (Always better than trading unless you really hit at the right time.) then buy something more affordable, when you sell the S&B sell the MH you have and go get something banging!
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Here in WA we might be better off trading as you pay sales/use tax of almost 10% on the difference if trading. Sell and buy another one you pay the tax on the full cost of the "new" one.
__________________
2009 45' Magna 630 w/Cummins ISX 650 HP/1950 Lbs Ft, HWH Active Air
Charter Good Sam Lifetime Member, FMCA,
RV'ing since 1957, NRA Benefactor Life, towing '21 Jeep JLU Rubicon Ecodiesel
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01-14-2015, 08:21 PM
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#35
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Senior Member
Country Coach Owners Club Solo Rvers Club iRV2 No Limits Club
Join Date: May 2011
Location: Vancouver, WA
Posts: 37,725
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We got lucky, my wife's company was closing out their plan and required us to move it so we took it and put it into an annuity, only pays 5% but we can take that out forever without touching the principle. I know we can take money out but it reduces what we can take out from there on. Never checked into taking a loan though.
__________________
2009 45' Magna 630 w/Cummins ISX 650 HP/1950 Lbs Ft, HWH Active Air
Charter Good Sam Lifetime Member, FMCA,
RV'ing since 1957, NRA Benefactor Life, towing '21 Jeep JLU Rubicon Ecodiesel
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01-14-2015, 08:29 PM
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#36
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Senior Member
Join Date: Feb 2013
Posts: 201
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Quote:
Originally Posted by cherv
another option is to get loan from credit union for RV then TAKE MONTHLY WITHDRAWALS instead of a lump sum withdrawal from your 401k to cover your loan. look at what is the yearly growth % of 401k balance is and what you would lose on lump sum withdrawal. make sure you consult a tax person before you take any action....just my opinion..
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Exactly what we did. This was on the advice of our portfolio manager.
__________________
2013 F250 Super Crew, 4x4, powerstrke
2013 Sundance 3310 CL, Platinum
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01-14-2015, 09:05 PM
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#37
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Registered User
Monaco Owners Club
Join Date: Oct 2009
Location: Varies Depending on The Weather
Posts: 8,517
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Doug & Jan,
Removing ANY money from your 401k prior to age 59.5 carries a 10% penalty PLUS you have to cough up federal & state income taxes. Some plans may vary a little but most will follow the normal rules.
Review this web site for questions and answers regarding 401k's.
https://www.expertplan.com/faq401k/f...tributions.jsp
It would be the BIGGEST financial mistake you could ever make prior to retirement.
When I decided to purchased my diesel pusher I financed my entire RV purchase versus using any of my retirement money. I now have 9 years left before the 20 year loan is paid off.
My IRA has increased significantly in the past 11 years whereas my Monaco Windsor has lost value significantly and in fact it is totally underwater by thousands. But it is my home and I plan to have it another 10 years or longer and by then it will be paid off.
My IRA makes significantly more per year than the low interest rate loan, 4.96%, that I have on the coach. Why would I want to take that money out just to pay off the loan? That would be like a double whammy.
My point is that IF you remove Tax-Free money that could double or triple in the next 10-12 years just to buy a depreciating RV that will constantly lose valve, THAT is not very wise management of your retirement savings.
Get some professional financial advice before making any decisions. You need to look at the TOTAL BIG picture and not just today.
Dr4Film ----- Richard
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01-15-2015, 07:12 AM
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#38
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Senior Member
Join Date: Feb 2011
Location: Snowbird - Waterford Mi and Citrus Springs Fl.
Posts: 3,609
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I believe they're talking about a loan - not a distribution.
From the website in the link above:
https://www.expertplan.com/faq401k/faq_loans.jsp
__________________
1997 37' HR Endeavor, 275hp Cat, Freightliner
03 CR-V Blue Ox, Ready Brake
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01-15-2015, 07:31 AM
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#39
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Senior Member
Join Date: Jul 2010
Posts: 5,314
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Just for input about withdrawls and 591/2. The rules have changed a little since I started mine in 2000, but the process is the same. When I decided to retire at the ripe old age of 47, I started a regular, monthly withdrawal from my IRA ( under rule 72T) and have done so since then. At age 60 I increased the withdrawal to help pay for Obamacare. Never paid a penalty as one was not due. Only had to treat the withdrawal as regular income.
As I recall the main change since I started mine was the method of calculating how much you can withdraw, but it can still be done.
The account is now worth a lot more than when I started withdrawing.
__________________
Tom
2016 Newmar Bay Star Sport 3004
2021 Jeep Gladiator Sport Willys
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01-15-2015, 07:40 AM
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#40
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Registered User
Monaco Owners Club
Join Date: Oct 2009
Location: Varies Depending on The Weather
Posts: 8,517
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Quote:
Originally Posted by WildRV
I'd like to get your thoughts on the idea of either borrowing or withdrawing money from a 401k for the purchase of an RV.
Thoughts/comments?
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Quote:
Originally Posted by ahicks
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The OP's very first post and sentence stated possibly either. So both or our links should help them make the BEST decision.
However, if you read down through the different FAQ's regarding loans from 401k plans, the disadvantages OUTWEIGH the advantages especially the tax consequences and future investment growth among others.
It's best to get a loan from a financial institution like a credit union. That's where I got my loan from.
I am not a professional financial adviser by no means and that's why I suggested that they should seek out highly trusted professional advice.
Dr4Film ----- Richard
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02-17-2015, 04:14 PM
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#41
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Senior Member
Join Date: Oct 2010
Location: OH - H - EYE - OH
Posts: 735
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__________________
On 10/15/10,
Puchased a 1989 Class B Dodge Xplorer In Cash
On 5/2/15, Fiance' purchased 2002 Dynamax Carri-go in cash.
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02-19-2015, 09:18 PM
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#42
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Senior Member
Join Date: Oct 2013
Posts: 284
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IMHO, it would really depend on the payback interest rate. Weather from your retirement account or local lender, you should attempt to pay as low as you can find. As stated above, bank rates are very low at this time.
2013 Palazzo 33.3
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