Yes, real downsides, and we'd think hard before doing it. CalSTRS and CalPERS are defined-benefit pension plans, so withdrawing may be possible when your wife leaves the profession. But a distribution before retirement age generally triggers an early-withdrawal penalty (commonly around 10% under IRS rules) plus ordinary income tax, and the taxable amount can push you into a higher bracket. Illustrative numbers: pull $100,000, lose roughly $10,000 to the penalty, then pay an estimated 30% to 45% in tax on the rest depending on your bracket and state, and you might net somewhere around $63,000. That's roughly $37,000 spent just to enlarge the down payment. Beyond the tax cost, you're also giving up a guaranteed lifetime benefit, which is hard to rebuild. We'd generally rather see a smaller down payment than a retirement account tapped that way, unless it's genuinely the only path to making the purchase work. The exact hit depends on her specific plan and your tax situation, so talk to a CPA or licensed tax professional about the impact before deciding.