At 23 In 1999 I closed my 401k and used the money to buy my first house. Can I recover any tax penalty now.?

Question

100% of the 401k money went towards my first house. I am sure I was penalized by the state and Fed. Is it too late to say that I used that money for the purchase of my first home and try to recoupe the money that I paid in penalties. It was over ten thousand dollars in my 401k at the time. I live in California.

Answer 1

If you closed out the 401k and took it as an early withdrawal (sounds like you did being 23 and closing the account) then upon distribution of the funds your taxes should have already been withheld. There was then a 10% penalty assessed on top of that.

The only way for 401k funds to be used for a home purchase is if your plan allows loans to be taken from the account. The plan administrator may also allow loans taken out for purchase of a primary residence to have a repayment period of 10-15 years as opposed to the 5 year limit for traditional loans.

If your money that was taken out was not a loan, and specifically not for a home then the distribution was already reported to the IRS in the year it was taken out on a 1099 form. The Form 1099-INT or Form 1099-OID you received will show the amount of any penalty you were charged. As far as I know there is no way to go back to recover this.

I am not from California so I don't want to say anything is for certain, but as far as everything I'm aware of you are out of luck as far as recovering the taxes/penalties.

If the withdrawal was from an IRA there are provisions where first time home purchases up to $10,000 can be used, but employer sponsored plans have more strict rules in place.

Answer 2

U can use it for regardless of u choose notwithstanding the ? is how a lot in consequences u receives if u withdraw early and also relies upon on how the 401 is determined up. i could avert retreating on it if u can except u r able to without penalty. There are alot of incentives for first time homebuyers correct this second and if u can get sufficient of the approach finished b4 april thirtieth there is an $8,000 tax credit that u can both use in the direction of final or in simple terms take the credit. I dont know if it ur first domicile yet have u looked at any of the options? the way the commercial gadget is u can locate respectable expenditures and a software that works for u. if truth be told there r classes accessible for almost anybody and any type of credit. As a unmarried mom i replaced into able to locate what i mandatory as a way to purchase. solid success and if u carry out a touch study u will locate something that works for u.

Answer 3

1) Too late

2) The penalty exemption only applies to IRAs. Not 401ks.

Answer 4

too late