401k for savings route

Hi everyone. I've searched the archives and have found some sporadic results on this. I'm trying to find members who have gone the savings route and used their 401k as the funding source. Sadly, there is very little verifiable information on using this as the source of the savings route. I want to find out others results and/or experiences going this route.

Thanks!

Quite a few people have used a 401K to meet the savings requirement .

You just need to provide:
- statements to show the money has been held in the 401K in full for at least 6 months
AND
- evidence that the money is immediately accessible (with or without penalty) and can be withdrawn at any time


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A 401K is covered under paragraph 7.4.4 of Appendix FM 1.7:

7.4.4. For example, in the UK a ‘stocks and shares’ Individual Savings Account (ISA) does meet the definition of a savings account and the funds can be considered as cash savings if all the requirements above are met. Likewise, a pension savings account from which savings can be immediately withdrawn.


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Time held isn't an issue (10+ years) Will have to find out how to show them the funds can be withdrawn at any time. I know they can be (done it in the past), but may have to ask them for documentation about it. I read somewhere that some say it has to be a 401k held with a financial institution. Ours are managed by a brokerage firm. I can't find any definitive facts on that issue either.

Also, does it matter what type of funds the monies are invested in? Ours are kind of a combo of stocks, bonds etc.

Time held isn't an issue (10+ years) Will have to find out how to show them the funds can be withdrawn at any time. I know they can be (done it in the past), but may have to ask them for documentation about it.

Usually people provide a letter from the 401K people stating when money can be withdrawn from the account and whether or not there is any penalty for doing so.

I read somewhere that some say it has to be a 401k held with a financial institution. Ours are managed by a brokerage firm. I can't find any definitive facts on that issue either.

There’s nothing in the guidance about 401Ks specifically, so as long as the account meets all the requirements listed for cash savings in Appendix FM 1.7, it should be fine to use.

The sentence I bolded above used to state in brackets, ‘(for example, a 401K)’ after ‘pension savings account’, but it doesn’t anymore (no idea why not, since no other wording has changed).

Don’t go with rumours or ‘what some people say’, go with what the official guidance says.


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Also, does it matter what type of funds the monies are invested in? Ours are kind of a combo of stocks, bonds etc.

You’ll have to check the guidance in Appendix FM 1.7.

In some cases, stocks/bonds may need to be cashed out first, and in some cases, they may not.



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