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JennyRake1
Level 1
March 9, 2022

401K Withdrawal subject to Early Withdrawal penalty?

  • March 9, 2022
  • 1 reply
  • 7 views

I have a client who withdrew $150,000 from his 401k to buy his primary residence. He is not a first-time home buyer but he is a publice service employee who turned 51 in 2021. Is he subject to the early withdrawal penalty? From my understanding, he would be exempt if he had retired or been separated from service.

 

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    1 reply

    qbteachmt
    qbteachmt
    Level 15
    March 9, 2022

    You might want to bookmark this table:

    https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions

    You have a hardship approval, that is up to the plan administrator. That's not an IRS issue.

    Now, read this:

    https://www.investopedia.com/ask/answers/081815/can-i-take-my-401k-buy-house.asp

    Homebuyer has no provision, and neither is being over 50 while still working there.

    It's all completely taxable + penalty.

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