June 3, 2019 1:29 PM
last updated June 03, 2019 1:29 PM
We took money out of our 401(k) plan to purchase a home and I don't think we should be penalized to pay the 10% penalty of $4,500. Any way around this?
June 3, 2019 1:30 PM
No. There is absolutely no way around that. The exception to the early withdrawal penalty for a first time home purchase applies only to an IRA withdrawal. It does not apply to a 401k withdrawal for that purpose. What your fund allows as a reason for withdrawal is totally different than what the IRS allows as an exception to the penalty for early withdrawal.