Our daily roundup of retirement news your clients may be thinking about.
Why clients shouldn't rush to buy a rental property Clients who consider tapping their 401(k) assets to acquire an investment property are advised to fully think through the ramifications, according to this Q&A article in MarketWatch. If a client is asking about a loan from his 401(k) plan in the first place, it's not a good sign since lenders want to see liquidity, not to mention an income high enough to service the debt, pay the property taxes and maintain the property without a renter for some time. Moreover, distributions from the plan can be subject to income tax and a 10% penalty if the person is younger than 59 1/2. Ultimately, the article concludes that the property would have to "perform sensationally" to make up for the hit to the investor's retirement savings. And if they are able to save diligently and accumulate some money, they likely will have a stronger credit profile and be better able to try this investment strategy in the future. --MarketWatch
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