This is the information I received: Any time you take money out of your 403(b) plan, you owe taxes on the distribution. Plus, if you're under 59 1/2 years old, you owe an extra 10 percent penalty on top of the taxes. Unfortunately, just because you're taking a hardship withdrawal doesn't mean you get out of the penalty. And, since there's no specific exception for buying a home, that means you're stuck paying it. So if you took out $15,000, you include an extra $15,000 in taxable income on your annual tax return, and you also pay a $1,500 penalty. The one exception is if you're a first-time homebuyer. The IRS does not impose the 10 percent tax penalty on first-time homebuyers – and the definition includes those who have not owned a main home during the past two years. If you fall into this category, you'll simply pay taxes on the distribution.
