Early distribution from qualified employer plan to fund first time hom

[Guest Vic Olson]

I have seen information implying that a $10,000 distribution from either a qualified plan or an IRA is exempt from the 10% excise tax penalty for early withdrawal (pre-age 59.5),if the funds are used for first time home purchase by a qualifying individual.

Other information implies that such a distribution is exempt only if it is made from an IRA. Which is correct?

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Vic

[MWeddell]

The excise tax exception you're referring to only applies to qualified first-time homebuyer distributions from an individual retirement plan (an IRA). See Code Section 72(t)(2)(F) as amended by the Taxpayer Relief Act of 1997.