Question: I read something a year ago about the possibility of paying off your mortgage with funds from a 401(k) plan without paying any penalty.

Question: I read something a year ago about the possibility of paying off your mortgage with funds from a 401(k) plan without paying any penalty.

Is that something that could happen?

— M.R.

Answer: Doubtful, said Rick Meigs, president of

"There was some talk of that during the middle of the (mortgage) crisis, but it didn't go very far," he said.

You can, however, borrow money from the plan without penalty (up to $50,000 or half the balance, whichever is less) to pay off the mortgage.

If you have an older home loan, you might get a better interest rate with a 401(k) loan, he said, because most plans charge the prime rate (now 3.25 percent) plus 1 or 2 percentage points.

You would, of course, pay the interest to yourself through the 401(k) plan instead of to a lender, which is great, Meigs said, but most plans require payback in five years, or within a few months if you leave the company.

And if you default, the money is considered an early withdrawal and subject to the 10 percent penalty and income taxes.

Q: I am 65 and have an annuity that matures this year. I have a number of options for the payout. How are the payments taxed?

— R.V.

A: You should consult a qualified accountant who can run through the options available on your specific contract. The way the money will be taxed depends on a number of factors, including whether it is in a qualified retirement plan and how you will get the payout.

You likely have a choice to "annuitize," or turn on a stream of payments for the rest of your life, or to take the money as a lump sum or installments over a defined period, said Mark LaSpisa with Vermillion Financial Advisors in South Barrington, Ill.

If you contributed after-tax dollars to fund the annuity and decide to take a lump sum, the earnings on the contributions will be taxed as ordinary income for the year you get the money, LaSpisa said.

If you annuitize the money, it generally comes out as an income stream for life made up of non-taxed return of principal and a prorated amount of tax on the earnings. Other payout options might generate taxes on the entire withdrawal until all the earnings in the account have been withdrawn.

Q: Can I pay the required minimum distribution for my 401(k) from an individual retirement account? Can I pay the minimum distribution from my 403(b) from an IRA?

— N.R.

A: Sorry, you can't cross those particular streams. If you have multiple IRAs, however, you can pay the required distribution from a single one of them.

Q: I worked at AT&T for 251/2; years and five years at another top company. I took my AT&T pension at 55.

Recently, I have been subbing part time for a public school system, making under $15,000 per year for the past four years. Social Security representatives say that because I have 30 years of covered earnings, I can get full benefits at 62.

Should I keep subbing or collect Social Security at 62? I'd like to do both and keep adding to my school pension benefit.

— V.G.

A: Logging 30 years of work where you paid into the Social Security system relieves you from the windfall elimination provision, but you won't get "full" benefits if you begin collecting at 62. If you're still working and healthy, you can avoid potential taxes and boost your Social Security amount sharply over the next several years by waiting until full retirement age or beyond, up to age 70. Experts say delaying from age 66 to 70 is akin to getting an 8 percent boost annually on your Social Security income.

Janet Kidd Stewart writes The Journey for the Chicago Tribune. Pose a question to