Level 3
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The bank holding a HELOC on my primary residence was closed by the FDIC.  The new bank that assumed the debt called in the loan.  Only way for me to avoid foreclosure was to take an early distribution from my 401K.  Is this a legitimate reason to not have to pay the 10% penalty?

Level 15
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Unfortunately, a hardship withdrawal from a 401(k) is subject to this additional10% tax just the same as any other early withdrawal unless another exception applies. For more information, please see Retirement Plans FAQs regarding Hardship Distributions.