HOME is where the Retirement Plan is?


Hardship Outlays to protect Mortgagee Equity (HOME) was recently introduced by U.S. Senator Johnny Isaksson (R-Georgia) and U.S. Representative Tom Graves (R-Georgia). The intention is to help homeowners keep their homes during periods of financial distress, by making it easier to borrow money from 401(k) savings.

This bill will help Americans who risk foreclosure use their own resources to make their mortgage payment on time without being penalized by the federal government,” says Rep. Graves, who has a background in the real estate business.

According to Rep. Graves, the housing crisis is the reason why the U.S. economy is yet to recover, and he wants U.S. home owners to be able to withdraw from their 401(k) without penalty.

Hardship Outlays to protect Mortgagee Equity (HOME) contains a lifetime cap of $50,000 or one-half of the present value of the 401(k) account – whichever is smaller. The funds must be used for mortgage payments within 120 days of withdrawal.

Introduced in House (10/05/2011)

Hardship Outlays to protect Mortgagee Equity Act of 2011 or the HOME Act of 2011 – Amends the Internal Revenue Code to allow taxpayers to withdraw amounts from their tax-exempt pension and retirement plans, without incurring the 10% penalty otherwise imposed on such withdrawals, to make mortgage payments on their principal residences.


  • Borrowing from the 401(k) will only delay the unevitable. Pre-2008 a lot of people bought homes that they couldn’t afford. It is better to move to a more affordable home that is within your means, than to use up money that you will very much need upon retirement. People need to learn the concept of delayed gratification.
  • A Hardship Outlays to protect Mortgagee Equity (HOME) Act would allow wealthier homeowners to save their homes without penalty, while less wealthy homeowners wouldn’t benefit from the act since they have already drained their 401(k) accounts – and paid both penalty and taxes.

Detailed information about the Hardship Outlays to protect Mortgagee Equity (HOME) bill

The aim of the bill is to amend the Internal Revenue Code of 1986 to provide penalty free distributions from certain retirement plans for mortgage payments with respect to a principal residence and to modify the rules governing hardship distributions.

If the bill is passed, paragraph (2) of section 72(t) of the Internal Revenue Code of 1986 will be amended by adding at the end the following new subparagraph:

(H) Distributions for principal residence mortgage payments

Distributions to an individual which are qualified principal residence mortgage payment distributions (as defined in paragraph (9)). Distributions shall not be taken into account under the preceding sentence if such distributions are described in subparagraph (A), (C), (D), (E), or (F) or to the extent paragraph (1) does not apply to such distributions by reason of subparagraph (B).

In addition to this, subsection (t) of section 72 would be amended by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively, and by inserting after paragraph (8) a new paragraph that concerns the 120 day time limitation, the aggregate lifetime dollar limitation, the plan dollar limitation, and the term “qualified mortgage costs”.

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