The money you take out of your 401(k) will be taxable to you no matter how you spend it. Since you are over age 59 1/2, you are no longer subject to the 10% early distribution penalty, but you will still pay income tax.

Don't take out any more than you absolutely have to at this time. The main advantage of a 401(k) is supposed to be that you get the money when you're retired and possibly in a lower tax bracket.

It sounds like you are downsizing from a house to a motorhome - not a bad move to save on expenses (including cleaning!).

Let us start by assuming that we are talking about a Distribution while you are still working (called an In-service Distribution), and not a loan that must be paid back.

The motorhome that you have your eye on can be considered your primary residence, so long as you treat it as such (making it the primary residence over any other location). Do not treat it as a second home, a vaction home, or some kind of 'home-away-from-home.' Also, the motorhome must have "cooking, sleeping, and toilet facilities" in order to be considered a residence (the IRS uses the term "dwelling unit").

It sounds as if you are planning on using an option in your 401(k) plan that allows In-service Distributions for down payment on a residence (up to $10,000 in most plans that permit such an option). So, the only extra payment that you have to worry about is the Income Tax that you would pay on the amount you take out of your 401(k) plan. [Sorry, but pre-tax monies still need Taxes to be paid on it at some point!]

Hope you enjoy your motorhome and the freedom of movement it allows you!

*Tax Disclaimer* The above material is not to be construed as a complete analysis of all Tax considerations. The opinion issued should not be used to avoid or evade Taxes, nor should it be relied upon to avoid any proper federal and/or other Tax-related penalties. Accordingly, this material is not intended or written to be used (and a Taxpayer cannot use it) for the purpose of promoting, marketing, and/or recommending to another party any Tax-related matters. Please be aware that Tax laws are subject to change at any time. Consult your trusted independent Tax advisor for the latest information/interpretations of Tax law.