My husband and I owe about 14k on a house we've been buying on contract that's next door to our regular home. I have almost that much in my 401k that I could take out and pay it off with. The home is worth about 55-60k right now.
I was thinking of getting a principal residence loan from my 401k and repaying it. I'd have a better return on the house that I'd ever get out of my 401k.
I'm not sure we really want to live in it. How would the IRS prove or disprove that we're using it as a primary residence? What would be the implications if we didn't or decided not to?