Depends on how you do it. If you borrow against it then you only pay it back like a loan. Usually at a low interest rate like 5%. If you actually take a distribution then you'll have to pay like 20% taxes when you take it out. And if your age is 59 & 1/2 at the end of the year when you file taxes you will have to pay an additional !0% early withdrawl fee.

Yes it is true. 10% is right. But as far as the additional salary and 10% goes I don't remember that with our situation. I may be wrong though.

>>>Or is this 100K distribution going to add to my anual gross salary and then the new tax bracket applies to it in addition to the 10%?
<<<

Yes

You cannot withdraw funds from a 401(k) for purchase of a home. It's entirely likely that the plan sponsor will not even allow a distribution for that purpose.

Although you can withdraw up to $10,000 from an IRA if you are a first-time home buyer and avoid the 10% penalty tax, the distribution would be fully taxable as ordinary income. That is not available for a 401(k), however.

You MAY be able to borrow from a 401(k) if your plan allows it. Not all plans allow that so you'll need to check with the plan administrator.

If you do borrow from a 401(k), interest is charged but that goes straight back into the plan so you're really just paying yourself. There is one thing to watch out for, however. If you leave your job you must repay any outstanding loan balances immediately. If you do not, they will be recharacterized as distributions from the plan and will become fully taxable as ordinary income plus the 10% penalty tax if you are under age 59 1/2.

All of it is taxed at whatever your tax rate is - and the taxes are figured INCLUDING the withdrawal. In addition, if you are under age 59-1/2, you'll pay a 10% penalty for early withdrawal.

If you are still employed at the company where the 401K is, you can't just roll it into an IRA to get the $10K tax exclusion permitted for first time home-buyers from an IRA.

Hardship distributions are allowed from 401k plans. There are certain 'safe harbor' definitions that must be followed. One of those is that you can withdraw money to purchase a primary residence. Not all plans have to allow for hardships. It's something that's available but not every company that sponsors a plan allows for them. In addition, sometimes only the actual $$ amount of contributions that you put in the plan are available for withdrawal. You should check with your HR/Benefits office to make sure that 1) Hardships are available and 2) What amount you have available to you for hardship.

A hardship distribution from a 401k is not considered a 'rollover eligible' distribution. This means that there is no mandatory federal tax withholding. There is 10% voluntary withholding, but you can elect to have no taxes withheld. You'll still be liable for them of course when you file your 1040.

You'll then receive a 1099-R tax form in the following January. It will show the gross amount that was withdrawn and any tax withheld. You'll have to include this amount on your tax return on page 1. It is taxed as ordinary income. Plain and simple it is added on to your other income so yes, it could bump you into a higher tax bracket. You will also pay an additional 10% penalty on the GROSS amount of the withdrawal if you are under age 59 1/2. There is no exception to this.