topic Took Money from 401k for Home Purchase in Get your taxes done using TurboTax

Took Money from 401k for Home Purchase

wtl3rd — Tue, 10 Mar 2026 06:48:45 GMT

Hi,

I live in Pennsylvania and I pulled money out of my 401k to purchase a new home. Will I be taxed on that amount of money I pulled from my 401k? If so, what is the tax percentage (federal and state)?

Re: Took Money from 401k for Home Purchase

drc845443 — Wed, 16 Nov 2022 22:56:53 GMT

Hello there!

I have assumed you withdrew from a traditional 401k plan, not a Roth 401k plan.

You will pay Federal taxes on the amount at your marginal income tax rate (can't tell you what that rate is from the information you have provided, plus if you are below 59 1/2 years you will also pay a penalty for early withdrawal from your 401k of 10%.

In general, PA does not tax distributions from 401k plans, as it also does not allow a deduction at the time of contribution.

Re: Took Money from 401k for Home Purchase

wtl3rd — Wed, 16 Nov 2022 23:01:12 GMT

Hi (again),

My employer allows both: traditional and Roth. I pulled the money from both. Is there a higher tax amount on the Roth? Also, is there any tax break for using the money to buy my first home?

Re: Took Money from 401k for Home Purchase

Opus 17 — Wed, 16 Nov 2022 23:09:43 GMT

@wtl3rd wrote:

Hi (again),

My employer allows both: traditional and Roth. I pulled the money from both. Is there a higher tax amount on the Roth? Also, is there any tax break for using the money to buy my first home?

Withdrawals from a traditional pre-tax 401(k) account will be subject to regular income tax at any age, plus a 10% penalty if you are under age 59-1/2.

Withdrawals from a Roth option account are more complicated. You can withdraw your contributions without paying any tax or penalties. (You always withdraw the contributions first and the earnings last.) If you withdraw earnings, you are subject to the following rules:

You are over age 59-1/2 and the account was opened in or before 2017 (for a 2022 withdrawal)	The withdrawal is qualified and tax-free
You are over age 59-1/2 but the account was opened less than 5 years ago	The withdrawal is not qualified and you pay income tax on the earnings, but not a 10% penalty.
You are under age 59-1/2	The withdrawal of earnings is subject to income tax plus a 10% penalty.

There is no exception or special treatment for using 401k money to buy a home. That rule applies to IRAs, but IRAs and 401(k)s are covered by different sections of the tax law, and the rules are different, even though the accounts have a similar purpose. If you had rolled over the funds from the 401(k) to an IRA first and then withdrawn money from the IRA, you could have avoided the 10% penalty on up to $10,000 of withdrawals used for a first time home purchase.