Can I use 401K for proof of funds in my express entry application?

Many folks from the US have a question about using 401K as a proof of funds in their express entry application. The express entry rules state that funds that are readily available to you are accepted and these should be stated on the financial institution's letter head.

Couple of things to consider -
1. Your 401K is a retirement savings investment. There is a 10% penalty for early withdrawals (you can't have penalty-free withdrawals until you are 59.5 years old) from a 401K. Along with that, you also pay taxes (depending on what bracket you are) on withdrawal. So, if you have $10000 USD in your 401K then you cannot use that since what you will get in hand is much lesser.


2. We had inquired about getting the details of ALL our investments at the firm, which housed our 401K. They told us to download the letter from the site. Remember you need to get the 6 month average balance and the current balance of your investment on the letterhead of the financial institution. Since there is the complication of penalty with early withdrawals, even if the firm gives you the 6 month balance of your 401k on the letter head, it is not the actual amount available to you.

3. Unlike other forms of investment like a mutual fund or a fixed deposit, it isn't easily liquidated. In , terms of liquidity, it is definitely easier to liquidate a 401K than real estate. However, it is harder to liquidate a 401K than a mutual fund in your non-retirement account.

4. While you can add it as a supplemental source apart from your primary ones, we don't recommend it to be your primary source of proof of funds.

Hope this helps with your decision for proof of funds.

Next steps -

1. More tips for proof of funds? Read along.
2. Templates for savings account and fixed deposits.
3. Want to work on other parts of your application?
4.  Ready  to submit your application? Here are some things you should know.

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