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I am 65yr. and retired. Can I use my 401K money to buy a first time home which will be primary tesidence. No t a loan, but down payment or full amount

Forum|Forum|7 years ago
June 1, 2019
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I have over 300,000 in 401K

Best answer by xmasbaby0

You might be confused because you have heard that folks can use money from an IRA for a down payment on a home without paying an early withdrawal penalty. That has never been true for a 401k--an early withdrawal from a 401k for a down payment would still incur a penalty.

But you are not making an early withdrawal since you are over 59 1/2, so no worries about a penalty. But any money you take out of the 401k will be taxable income, no matter what you use it for. You will receive a 1099R in January which must be entered on your next tax return.

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xmasbaby0Answer

Employee

You might be confused because you have heard that folks can use money from an IRA for a down payment on a home without paying an early withdrawal penalty. That has never been true for a 401k--an early withdrawal from a 401k for a down payment would still incur a penalty.

But you are not making an early withdrawal since you are over 59 1/2, so no worries about a penalty. But any money you take out of the 401k will be taxable income, no matter what you use it for. You will receive a 1099R in January which must be entered on your next tax return.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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SweetieJean

Employee

Yes, but it will be taxable for Federal, and perhaps for state.

There is no penalty (due to your age).

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SweetieJean

Employee

Keep in mind that any increase in income can negatively impact your deductions and credits, make more of your Social Security benefits taxable, and raise your future Medicare premiums.