Submitted by Mega_Fry t3_10q60u3 in personalfinance
Hello, in December of 2021 I withdrew roughly 10,000 from my 401(k) to facilitate the purchase of my first home. The deal fell through in escrow for unrelated reasons and I ended up having to pay a penalty of about 1000 dollars. I ended up buying a house in the summer of 2022 and was wondering if I could claim a refund for the early withdrawal penalty. I normally file online but would it be best to talk to a CPA about this?
There is no 401k penalty exception for withdrawals related to buying a home. (There is for IRA, but not 401k.)
And for IRAs, you only have 120 days to close from the withdrawal, so this wouldn't qualify even if it was from an IRA.
I don’t think that is correct. I believe it is one of the 5 hardship withdrawal exceptions.
Hardship withdrawals are still subject to the 10% penalty unless some other exception applies
Principal residence is an exception. Correct?
Number 2 on last irs section you posted.
I'm not seeing the phrase "principal residence" anywhere on that page.
If you look at the table under the row for "homebuyers" it clearly says "no" for qualified plans (401k, etc.) and "yes" for IRA.
Last one you posted before you changed it.
That just means you're allowed to take the withdrawal for that reason. It doesn't mean it's exempt from the 10% penalty.
> Hardship distributions are subject to income taxes (unless they consist of Roth contributions). They may also be subject to a 10% additional tax on early distributions.
I figured they were screwed on days, but for this application what does “safe harbor” mean and principal residence is under there.
I'm not seeing the phrase "safe harbor" either in my post or OP's.
It’s not op but another irs link other person shared sorry I posted under you by mistake.
Thanks for the info. Looks like I won't be able to claim anything. Makes filling this years taxes easier shrug
Another good reason to not take out 401k money
Oh I am aware. But life gets in the way sometimes
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