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    paulan55's Avatar
    paulan55 Posts: 1, Reputation: 1
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    #1

    Dec 30, 2008, 11:56 AM
    Bought house in Jun, 2008, withdraw 401k in 2009
    I bought a house in Texas in June, 2008.
    I have a 401k and want to withdraw $4500 without early withdrawl penalty,
    But due to address change, my withdrawl will occur in Jan, 2009.

    Can I still apply for early distribution penalty exemption in 2009 tax calendar year for a house bought in 2008? If yes, can someone describe steps to do so, please?

    Thanks.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Dec 30, 2008, 12:12 PM
    First, the waiver of the Early Withdrawal Penalty due to the first-time purchase of a home is permitted ONLY IF you make the withdrawal from a traditional IRA, NOT a 401K.

    You CAN borrow money from the 401K to help with the purchase of a home, but that money must be repaid with interest.

    Besides, even if the 401K distribution were permitted, the distribution must occur BEFORE the house purchase, NOT after the fact.
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