401k withdrawal for home purchase

Can I avoid paying taxes on a 70,000 dollar 401k withdrawal if it is used to buy my primary residence before selling my present home?

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No you cannot.  A withdrawal from a tax deferred retirement account is a taxable event.  You would enter the taxable amount of the withdrawal on your federal tax return and it is taxed at your current tax rate.  If you were under the age for the early withdrawal penalty exception then there would be a 10% early withdrawal penalty assessed on the federal tax return and entered as a tax liability.

There is no early withdrawal exception for a first time home purchase using a 401(k).  The exception to the 10% penalty is only for withdrawals from an IRA for a first time home purchase and then only on the first $10,000 withdrawn.

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