turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

I took a 401k withdrawal for a down payment for a home. I know the amount is taxable (I'm under 59). But a portion should be exempt from penalty. How do I log that?

 
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

7 Replies

I took a 401k withdrawal for a down payment for a home. I know the amount is taxable (I'm under 59). But a portion should be exempt from penalty. How do I log that?

Oh no.   You misunderstood.   There is no exemption from the early withdrawal penalty for money you took out of a 401k for a down payment.   That exception is only for a withdrawal from a traditional IRA for a down payment.   You are going to be subject to the 10% penalty and the ordinary tax.   Enter your 1099R on your tax return:

 

To enter your retirement income, Go to  Federal> Wages and Income>Retirement Plans and Social Security>IRA  401 k) Pension Plan Withdrawals to enter your 1099R.

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

I took a 401k withdrawal for a down payment for a home. I know the amount is taxable (I'm under 59). But a portion should be exempt from penalty. How do I log that?

Sorry. IRAs and 401(k)s are controlled by different sections of the tax law and have different rules, even though they have broadly similar purposes.  The exception to the 10% penalty for a first time home buyer applies to an IRA but not a 401(k). If you are within 60 days of the withdrawal, you could re-deposit the money into the 401(k), then do a partial rollover of the 401(k) money to an IRA and withdraw it from the IRA. But taking the money directly from the 401(k) is not exempt from the 10% early withdrawal penalty.

tabbott14
New Member

I took a 401k withdrawal for a down payment for a home. I know the amount is taxable (I'm under 59). But a portion should be exempt from penalty. How do I log that?

In 2022, can I do a partial rollover from my 401k into a IRA and then withdraw those funds for a first time home downpayment without incurring the 10% early withdrawal penalty?

 

I took a 401k withdrawal for a down payment for a home. I know the amount is taxable (I'm under 59). But a portion should be exempt from penalty. How do I log that?


@tabbott14 

Yes.  That’s the way you can use 401(k) funds for a “first time” home purchase and avoid the penalty, you have to do a rollover first.  Note the withdrawal from the IRA will still be subject to regular income tax, and the penalty exemption only applies to the first $10,000.   

DawnC
Expert Alumni

I took a 401k withdrawal for a down payment for a home. I know the amount is taxable (I'm under 59). But a portion should be exempt from penalty. How do I log that?

Yes!  You can avoid the 10% early withdrawal penalty if the funds come from an IRA, but not from a 401K. 

 

Exception to 10% Additional Tax   You will see a YES in the IRA column for ''qualified first-time homebuyers, up to $10,000''    @tabbott14

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
tabbott14
New Member

I took a 401k withdrawal for a down payment for a home. I know the amount is taxable (I'm under 59). But a portion should be exempt from penalty. How do I log that?

Thank you!

dmertz
Level 15

I took a 401k withdrawal for a down payment for a home. I know the amount is taxable (I'm under 59). But a portion should be exempt from penalty. How do I log that?

If you are still working for the company providing the 401(k) plan, you'll need to check with the plan to see if any in-service distribution is permitted.  If not, you won't be able to do a rollover from the 401(k).  If you do perform a rollover from the 401(k), be sure to do it as a direct rollover to avoid otherwise mandatory tax withholding on the distribution from the 401(k).

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies