No. Withdrawals from pre-tax retirement plans are always subject to regular income tax. If you are younger than 59-1/2, they are also subject to a 10% penalty for early withdrawal. There are some tax provisions that provide relief from the 10% penalty. But there are no provisions that provide relief from the income tax.
Unfortunately there is no relief for withdrawing funds from your 401k for use in upgrading your personal residence.
You do however, get to increase the cost basis of your home by the value of the upgrades, so that you can reduce the gain on your home if/when you sell.
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