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maurousa2000
Level 1

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

 
8 Replies
KatrinaB48
Expert Alumni

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

No, there is no early withdrawal penalty exception related to remodeling your home. Please view this IRS link for more information about 401(k) exceptions to the 10% penalty.

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dmertz
Level 15

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

I think KatrinaB48 meant to say Yes, it's still subject to an early-distribution penalty unless you qualify for an exception to the penalty and no, spending the money on your home is not an exception to the penalty.

maurousa2000
Level 1

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

Thank you 

maurousa2000
Level 1

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

DMERTZ. Are we sure ?

dmertz
Level 15

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

See the IRS link provided by KatrinaB48 for the available penalty exceptions; using the money for your home is not an exception.

 

Rather than directly answer the question that you asked, KatrinaB48 provided the answer to the question, "Does this using the money for home remodeling provide a penalty exception."  It was not meant to indicate that you do not owe a penalty.  Whether or not you are subject to an early-distribution penalty depends on whether or not you qualify for any of the actual penalty exceptions.

maurousa2000
Level 1

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

Thank you 

 

KrisD15
Expert Alumni

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

Yes, that is not an exception to the distribution, although there is one for a first-time home buying. Did you purchase the home in 2019?

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dmertz
Level 15

If you take money out from 401k to remodeling your house, do you still need to pay extra 10% tax ?

The first-time homebuyer's exception only applies to distributions from an IRA.  This distribution was from a 401(k), so the first-time homebuyer exception does not apply.

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