I do fairly a bit of labor on the facet, and make vital revenue by way of 1099s. I’ll make about $10,000 this 12 months.

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Proper now, my spouse and I are engaged on saving for a downpayment on a house.

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Is there any draw back in contributing all of my particular person 1099 revenue to a person 401ok to keep away from taxes – however nonetheless accessing it by way of a 401ok mortgage? That method I’d keep away from paying state and federal taxes on the $10,000 ($8500 after Self-Employment Taxes). I do know I can solely entry 50% – and that’s tremendous by me. I will probably be rolling over my present 401ok of $30,000 as nicely.

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If I would not contribute that 1099 cash to the person 401ok – it will simply get taxed (25% federal, 6% state) and put in our Ally Financial savings account for our eventual house buy.

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This simply looks like a no brainer to me? Am I lacking one thing? Is there some kind of large inefficiency in 401ok loans?

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I do know they are saying it is by no means a good suggestion to withdraw from a 401ok – however on this function, the cash I am contributing is not precisely earmarked for retirement anyway. That is cash that might have in any other case been taxed and put right into a financial savings account. I would not contact my rollover funds from my present 401ok.



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