I borrowed money from 401k in Dec 2019 to buy home but didnt close till Jan 2020 can I use that i bought a new home in 2019 to help with early withdrawal

Forum|Forum|6 years ago
February 4, 2020
2 replies
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AmyC

Level 15

Money from a 401K does not qualify for the home purchase exception. An IRA distribution would have. Please see the list from the IRS on Retirement Topics, distributions and taxability.

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dmertz

Level 15

If you received a Form 1099-R for the money that you took from the 401(k), apparently you did not take a loan from the 401(k) the money but instead took a distribution. If you do not roll the money over to another retirement account by the 60th day following the date of the distribution, the distribution is taxable and subject to an early distribution penalty. As AmyC indicated, using the money to purchase a home is not an exception the the early-distribution penalty on a distribution from a 401(k).

Since the distribution occurred in December 2019, you might still have a few days to come up the money to roll over some or all of this distribution to avoid the penalty and to continue to defer the taxes on whatever portion you roll over.