|
|
|
» From: Chicago, IL Dear TaxMama, I read that there was a law that said that you could withdraw up to $10K from a 401K plan for the purchase of a home without withdrawal penalties...... 1 - Is this true 2 - How can it be done? Are there forms and are there any ramifications? Any help would be appreciated and do you do taxes in Illinois and how much do you charge? Corrine Dear Corinne, Actually, you can do this for a FIRST home purchase. But only from an IRA, not a 401k. (First time means, for this purpose, you haven't owned a home for at least the last 24 months.) You would use Form 5329, the exception is item I Form 5329 Instructions (exception #09 in the instructions) You have a alternatives, though: 1) You can borrow money from your 401k with no tax consequences at all. Just don't do this if you're planning to leave the company soon. You'd have to pay it back. 2) You can have your 401k administrator transfer $10,000 to an IRA (if the 401k is set up to let you do that). Then, draw the money from the IRA. Talk to a tax pro and work out some details specific to your situation. Best Wishes, Eva Rosenberg Click Here for TaxMama's Honor System |
 |
|
|
 |
|