Submitted By: someone
Answered: November 3, 2020 11:14 pm

I am 67 years old and took a distribution from my 401(k) account to pay closing costs for my new home. Am I taxed on this distribution?

The distribution is included in gross income; there is no exclusion in the law for using retirement account funds for this purpose. However, because you are over age 59½, there is no 10% early distribution penalty. Younger participants taking 401(k) withdrawals for home-buying costs are subject to penalty. The exemption from the 10% penalty only applies to withdrawals from IRAs for first-time homebuyers, and only up to $10,000.

Tax Glossary

Taxable income

Net income after claiming all deductions from gross income and adjusted gross income, such as IRA deductions, itemized deductions, or the standard deduction, and personal exemptions.

More terms