Submitted by **Vivid_Fox617** t3_10pyb51
in **personalfinance**

-I have a good bit of money saved up to purchase a new home, but not enough to pay cash. I would need an additional 200K or so to pay cash. -I have an inherited 401K that I am on year 3 of the 10 year emptying rule with -I am trying to figure out what the differences would be between getting a mortgage for the 200K or taking it out of that inherited 401K (which, keep in mind, i have to empty anyway so the 10% penalty doesnt apply) -Obviously I would take a big income tax hit by taking the 200K, but I want to know how to figure out EXACTLY how much (and for that matter, I would need to figure out how much to take out to equal 200K after the taxes -Let’s say I get the mortgage for 200K and pay it off in 3 years….so would my comparison be 36 mortgage payments vs the extra tax hit of the withdrawal option? -paying cash will also save me about 3-5K in closing costs

Am I thinking of this question right? How do I answer it? Not asking you to answer it, though feel free I guess, but asking how do I answer this question taking everything I should take into account into account

BouncyEggt1_j6msbh2 wrote401k (assuming Traditional) disbursals stack on top of your income. Then ordinary income tax brackets are applied.

So…

Start with your income

withoutthe 401k distribution.Enter it into an income tax calculator like this:

Write down your total Federal income tax.

Then start adjusting the income until you get an additional net post tax income of 200k.