It depends on what type of retirement account he took it from. Was it an employer-sponsored account such as a 401k or an IRA.
In certain circumstances, you can take money from an IRA and not be subject to an early withdrawal penalty. This is not the case with a 401k or similar plan. It is still taxable from both types of plans.
Even if you are under age 591/2, you don't have to pay the 10% additional tax on up to $10,000 of distributions you receive to buy, build, or rebuild a first home. To qualify for treatment as a first-time homebuyer distribution, the distribution must meet all the following requirements.
1. It must be used to pay qualified acquisition costs (defined next) before the close of the 120th day after the day you received it.
2. It must be used to pay qualified acquisition costs for the main home of a first-time homebuyer (defined below) who is any of the following. a. Yourself. b. Your spouse. c. Your or your spouse's child. d. Your or your spouse's grandchild. e. Your or your spouse's parent or other ancestor.
3. When added to all your prior qualified first-time homebuyer distributions, if any, total qualifying distributions can't be more than $10,000.
If both you and your spouse are first-time homebuyers (defined later), each of you can receive distributions up to $10,000 for a first home without having to pay the 10% additional tax. Qualified acquisition costs. Qualified acquisition costs include the following items. • Costs of buying, building, or rebuilding a home. • Any usual or reasonable settlement, financing, or other closing costs.
First-time homebuyer. Generally, you are a first-time homebuyer if you had no present interest in a main home during the 2-year period ending on the date of acquisition of the home which the distribution is being used to buy, build, or rebuild. If you are married, your spouse must also meet this no-ownership requirement.
