What are the penalties for withdrawing your retirement funds early to buy your first home?

Posted by Retirement Advisor
retirement
one4Christ asked:


Does anyone know what (if any) are the penalties for withdrawing some or all of your retirement funds to use as a down payment to purchase your first home? I have a 457 retirement plan and I am considering pulling out $10K to go towards the purchase of my first home. Normally I would be penalized 30% but I heard somewhere that there are 3 circumstances where this is allowable without penalties. Can anyone vertify this is accurate or tell me where I can get more info.

Thank you!

KATY

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

This entry was posted on Friday, October 17th, 2008 at 1:40 am and is filed under Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

« 401k Retirement Plan - What You Know About It?
When should I start saving for retirement and how do I do it? »

3 Responses to “What are the penalties for withdrawing your retirement funds early to buy your first home?”

  1. gremlingts Says:
    October 17th, 2008 at 3:07 am

    Generally speaking, the first 10k can be withdrawn without penalty, BUT you still have to pay the taxes on that, for a first-time home buyer ( not if you’re buying for the 2nd or 3rd time ). I needed 10k IN FULL when I did it, so I had to withdraw 14,000 to cover the taxes, and since I went 4k over I had to pay penalties on that 4k as well as taxes. I think medical emergency qualifies as well, but I’m not sure on any other usages.
    - The Gremlin Guy - happily living at my Home for 7 years now..

  2. MathBioMajor Says:
    October 17th, 2008 at 12:51 pm

    Contact the institution which administers the retirement plan. Frequently you can find this type of information on-line at their website. I like the personal touch better however. Call and speak to a live person tomorrow if possible. You should be able to find their telephone number at their site also.

  3. Wayne Z Says:
    October 18th, 2008 at 1:41 pm

    The penalty exemption on the $10,000 only applies to IRAs, not employer sponsored plans.

    Also, generally you have to leave the job to have access to the money.

    One option may be a loan from the plan. Check with the administrator of the plan to see if it allows for loans.