Expert: Ed McFarland - 9/17/2006

Question
If I want to take the money out of my pension plan now in order to do construction on my home or purchase a new home, what are the penalties if any.......I know you don't get taxed if you are a first time buyer for a home but what about construction or the purchase of a second home.....I am in my thirties so nowhere near retirement but can't afford to get killed in taxes?  

Answer
If take money out it is immediately taxed as ordinary income plus a 10% penalty on the entire amount.

That's why they are called retiement plans, not savings plans.

Check your plan document tohugh and see if the there is provisions for loans, to borrow from yourself.

The risk is that if you leave your job, or it leaves you, you may have to pay back the outstanding balance right away.

Good luck