Need help, what if I can't withdraw funds penalty free from my 401(k) plan to purchase my first home?
If I can't withdraw funds penalty free from my 401(k) plan to purchase my first home, can I roll it over into an IRA and then withdraw that money to use as my down payment?
Yes, if you are receiving a distribution from a 401(k) that is eligible to roll over into a IRA and you meet all of the qualifications for an IRA distribution for a first-time homebuyer. Your plan administrator is required to notify you before making a distribution from your 401(k) plan whether that distribution is eligible to be rolled over into an IRA. To see if you qualify for a distribution to be used as a first-time homebuyer, refer to Chapter 1 of Publication 590, Individual Retirement Arrangements (IRAs).
References:
- Publication 560, Retirement Plans for Small Business (SEP, Simple, and Qualified Plans)
- Publication 575, Pension and Annuity Income
- Publication 590, Individual Retirement Arrangements (IRAs)
- Tax Topic 424, 401(k) plans
- Tax Topic 558, Tax on early distributions from retirement plans
- Tax Topic 412, Lump-sum distributions