[tigger44]

Has anyone done this while still getting the adoption tax credit? I am still within the 5 year window for receiving the adoption tax credit, but wondered how that is effected by withdrawing from a 401k? Would all the taxes withheld from the 401k withdrawal still be refunded to me for the adoption tax credit? Don't want to jeopardize anything, but need to access the cash from my 401k.

[pwnort64]

I did something similar. I actually did not withdraw from my 401k. I borrowed from it. While it would have been better to leave it alone, I felt that borrowing from it was better than withdrawing. There were no penalties. And the interest that you pay when you pay it back, you pay back to yourself. I had no issues with taking the tax credit and borrowing from my 401k.

I know it's not the exact question that you were asking, but thought I would throw it out there as another option.

[Shark01]

Withdrawing and borrowing from 401s are two different things. If you withdraw from a 401k, its treated like income. But the only way you can affect your tax credit is if that extra "income" puts you over the limit. Of course there is a 10% penalty for making a withdrawal in addition to taxes due.

If that's the case, borrowing is a better idea. However, if you leave that job before its paid back, the balance of the loan come due in 60 days. Unless you have that kind of money just sitting around, it will become a withdrawal, subject to penalties and taxes.