No - Using the money for the purchase of a home (not the mortgage payment) generally falls under a hardship withdrawal if the house you are purchasing is a primary residence and you would not need to pay the penalty.

That is for MOST 401K, but to be sure, talk to whoever manages your 401k.

Use this website www.irs.gov/retirement/article/0,,id=162416,00.htm l#7 for addition information about
401k/IRA early distribution and hardships.

I am retired with no chance to work, my 401k is loosing every month, what happens if it goes to zero worth ?

Is the hardship withdrawl still subject to income taxes the year you withdraw?

Can I pay the taxes that I borrowed from my 401k early?

If I withdraw all or part of my 401 k to purchase my first primnary residence and use the money as a down payment- Do i still pay 20%FED/10%IRS/State tax as well?

If I withdraw all or part of my 401 k to purchase my first primnary residence and use the money as a down payment- Do i still pay 20%FED/10%IRS/State tax as well?

It is not a hardship withdrawal as the answer suggested. The rules allow an exception the the penalty for first time homebuyers. You will still need to pay the tax on the withdrawal. The maximum you can withdraw is $10,000 or the most you will receive an exception for is $10,000 if you withdraw more. You also will need to talk to the company where your 401K is to make sure they will not put a year stay on your contributions. Typically most 401K plans will not you contribute for a year once you make a withdrawal. There are some companies who provided exceptions.