[kaoly16]

My husband and I are planning on adopting our second child from South Korea. We are still paying off the adoption fees for our first child, but we want to go ahead and start the second adoption. We are in our early 30's and I wonder if anyone has ever used their 401K to pay for adoption fees. I am researching about it, and I know that there might be a 10% penalty fees.

Can anyone share their experience with me if you have used your 401K before. Thanks.

Caroline

[sakelley]

Instead of looking at withdrawing the money, you could look into if your plan allows loans. We borrowed money from my 401K to pay part of our adoption costs. The loan has a low interest rate and the nice thing is that you are actually paying yourself the interest moeny. We could choose from 1 month up to 48 months to pay it back. The downside to it all is that you are not earning any interest (except the interest rate you are charged for the loan) on the money that you borrowed so you miss out on returns. Also, if you were to lose your job or company was sold, sometimes they require you to pay the money back within a certain timeframe or they consider you defaulting on the loan and it is considered an early withdrawl and subject to the 10% penalty. Lucky for us, when my company was sold - the day we arrived back home from China with our daughter - they let me keep my money in their 401K program so I could continue to pay back the loan.

[kaoly16]

Thanks Sheri for sharing your experience with 401K. I talked to my 401K administrator, and it sounds like the 401K loan is a better solution than early withdrawal. I don't like the 10% penalty. I am looking at all my options right now, but the 401k loan sounds much better than a credit card or regular loan so far.

Thanks for your input.

Caroline

[mmcool]

Another option could be a home equity loan. One of the benefits to doing that is that the interest you pay on it is tax deductible.

Good luck on your second adoption!

Melissa