Yes – Qualified
first-time home buyers are eligible for additional 10% penalty tax exclusion for up to $10,000 on
an IRA
distributions, but not 401(k) distributions.
However, you still will have to pay the
"regular" income tax on the distribution itself, excluding your
nondeductible contributions. So
be sure to answer follow up questions about your IRA distribution. TurboTax
will ask if you have any nondeductible contributions in your IRA (called
basis). Please be sure to enter your basis amount, only the difference between
your distribution and your basis will be taxed.
As to the definition of the "qualified first-time homebuyer": you may qualify for the exception if you had no interest
in a main home and met the
2-year rule:
Per IRS: (page 26, IRS Pub 590B): "Generally, you
are a first-time homebuyer if you had no
present interest in a main home during the 2-year period ending on the date of
acquisition of the home which the distribution is being used to buy, build, or
rebuild. If you are married, your spouse must also meet this
no-ownership requirement."
