fivel wrote:Should I sell the taxable investment and proportionately increase my 401k contributions? Then withdraw from my Roth IRA as needed for the home purchase? Or is there not much to be gained this way? I'm having trouble seeing the whole picture.
I would suggest selling the taxable investment for your down payment, and not increasing your 401(k) contributions this year. Once you know how much you have left after buying the home, you can increase your 401(k) contributions to make up for what you didn't contribute this year.
The problem with your suggested strategy is that you would have to withdraw from your Roth IRA, and this would cost you the opportunity to withdraw from the Roth IRA tax-free in the future. If you buy your house without touching the Roth, and then you discover that you need a new car or a new roof, you can withdraw from the Roth tax-free rather than either taking out a loan or paying a penalty on withdrawals from retirement accounts.