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martinez-julie06
New Member

If i withdrew money out of my 401k for a down payment on a house....can that reason lower my tax debt?

 
1 Reply
jerry2000
Alumni

If i withdrew money out of my 401k for a down payment on a house....can that reason lower my tax debt?

No. There is an exception to the penalty for early withdrawal of up to $10,000 from an IRA for a first time ever home purchase, but that is only for an IRA. There is no such exception for a 401k withdrawal for that purpose. If you are under 59 1/2, then you will pay a 10% penalty for early withdrawal and also pay ordinary income tax on the total withdrawal.
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