topic I am buying a home shortly. I need to take money from my 401K rollover. How do I make sure I don't get penalized for early withdrawal? This is my first home purchase. in Retirement tax questions

I am buying a home shortly. I need to take money from my 401K rollover. How do I make sure I don't get penalized for early withdrawal? This is my first home purchase.

zikka2016 — Fri, 10 Jan 2020 18:40:42 GMT

Re: I am buying a home shortly. I need to take money from my 401K rollover. How do I make sure I don't get penalized for early withdrawal? This is my first home purchase.

xmasbaby0 — Fri, 10 Jan 2020 19:17:25 GMT

Well, if you are younger than 59 1/2 you will be penalized for the early withdrawal. Taking money out of a 401k to purchase a house is NOT an exception to the early withdrawal penalty. You will also be subject to ordinary income tax on the money you take out, so it is a very expensive way to make a down payment. If you had a traditional IRA you would be able to take out up to $10,000 without penalty but that is not true for a 401k.

Next year in January or February they will send you a 1099R for the distribution from the 401k that you take in 2020 and you will be required to enter it on your 2020 tax return.

Re: I am buying a home shortly. I need to take money from my 401K rollover. How do I make sure I don't get penalized for early withdrawal? This is my first home purchase.

VolvoGirl — Fri, 10 Jan 2020 19:30:21 GMT

What is your 401k Rollover? Did you roll it over to a IRA account? How much will you take out? You can avoid the 10% early withdrawal on up to 10,000 from an IRA for a new home.