Using funds from 401k account to buy new home in Canada?

[newzenith]

We have saved more than $100k in 401k from my job which we were expecting to use for our first home purchase as soon as my wife graduates and lands a job in the US. However, in the end she got her dream job in Canada so our whole family is moving there permanently (for at least 6 years). We plan to buy a house within a year of settling down there. However, without using the funds from the 401k account, we won't have enough for the down payment. Is there any way we can borrow the funds from a US 401k account for a first home purchase in Canada without incurring the dual taxes and penalties from both US and Canada sides? Thanks a lot.

[nelsona]

No.

First off, you can only escape the 10% penalty (not the tax) on the first 10K to buy a first home, and that can only be from an IRA, not a 401(K).

So, the best you could do is move your money to an IRA (after you leave the job), and then take 10K out ofr thehouse. You would pay tax on that money, first in US, and if living in canada at the time of withdrawal, in Canada as well.

[nelsona]

You can't borrow from a 401(k) unless you are working for the employer, and it all becomes due whan you leave.