Q. I did an early withdraw on my 401k for a first time homebuyer. The first $10k is suppose to be exempt. Right?
A. No. There are two things wrong.
1. There is only an "exemption" from the 10% early withdrawal penalty, not the tax on the distribution
2. The first time homebuyer penalty exception applies only to IRA withdrawals. 401k accounts are not eligible.
Reference:
If it was an IRA, instead of a 401k, then the penalty exception will appear on line 2 of form 5329 with code 09.
Review your tax return to be sure. You can review the .pdf. and you can view your Schedule 2, Part II, Line 8 to see the penalty. Instructions below will show you how to do both.
You have access to all forms when you choose to print your return in TurboTax Online/Mobile. However you are required to pay before printing, but do not have to file until you are ready.
If you are using TurboTax Desktop you can switch to Forms and review all forms and worksheets.
From the left rail menu in TurboTax Online, select Tax Tools (You may have to scroll down on the left rail menu.)
For TurboTax Desktop, change to 'Forms' and review the forms
Q. I did an early withdraw on my 401k for a first time homebuyer. The first $10k is suppose to be exempt. Right?
A. No. There are two things wrong.
1. There is only an "exemption" from the 10% early withdrawal penalty, not the tax on the distribution
2. The first time homebuyer penalty exception applies only to IRA withdrawals. 401k accounts are not eligible.
Reference:
If it was an IRA, instead of a 401k, then the penalty exception will appear on line 2 of form 5329 with code 09.
As Hal_Al said, this exception only applies to distributions from an IRA. A 401(k) is not an IRA.
Had you rolled the distribution over to an IRA and then taken the distribution from the IRA, you would have been able to use the first-time homebuyer's exception to avoid the early-distribution penalty.