How do I document assets in a Retirement account?

Retirement Accounts refer to assets accumulated by the Borrower for the purpose of retirement.  The Mortgagee may include up to 60 percent of the value of assets, less any existing loans, from the Borrower’s retirement accounts, such as IRAs, thrift savings plans, 401(k) plan, and Keogh accounts, unless the Borrower provides conclusive evidence that a higher percentage may be withdrawn after subtracting any federal income tax and withdrawal penalties.  The portion of the assets not used to meet closing requirements, after adjusting for taxes and penalties, may be counted as Reserves.   The lender must obtain the most recent monthly or quarterly statement to verify and document the existence and amounts in the Borrower’s retirement accounts, the Borrower’s eligibility for withdrawals, and the terms and conditions for withdrawal from any retirement account.   If any portion of the asset is required for funds to close, evidence of liquidation is required. 

For additional information see Handbook 4000.1 II.A.4.d.iii(C) or II.A.5.c.iii(C) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04299