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Asked 5/9/2009
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Is there special tax exemptions if using the withdrawl for down payment on house? I used my 401K for a downpayme nt and moved in to my new house the 1099 never made it to the new address and I forgot to add the withdrawl to my tax return I paid the 20% withdrawl penelty at the time not the government wants 1000 plus 1000 in fines that is a 100% fine ridiculous. Are there exemptions as this was techinically not income but a downpayment? |
Answer 1/1 - Submitted 5/9/2009
There is no exception from the early distribution penalty for downpayment on a home (not from a 401(k) anyway, might have been if this was an IRA).
At the time when you were making the contributions to the 401(k), that amount was excluded from your taxable income. So, when you take it out and use it ... it's income.
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