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Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2665
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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i am 34 and going through a divorce. my ex-wife and i owned

Customer Question

i am 34 and going through a divorce. my ex-wife and i owned a house we built about seven years ago. she legelly signed over all of the debt in her name (the house and car). I am looking at to get a morgage loan for a house of my own. i have a 401k plan with a significant amount of money. my question is i heard i could roll over my 401k to a IRA plan and withdraw up to 10000 without a 10% penalty fee for a down payment on a home? is this true in my situation? if not what percentage of taxes and penalties would i have to pay if i withdraw early? i live in louisiana.
Submitted: 3 years ago.
Category: Tax
Expert:  Barbara replied 3 years ago.

Welcome and thank you for giving me the opportunity to assist you with your tax question.


The home buying exception applies only to the 10% penalty, but the criteria is that you cannot have owned a house in the previous two years and the distribution amount is limited to $10,000.


I know this is not the answer you were hoping for, but it is my responsibility to give you the correct answer.


Thank you and best regards,


Expert:  Barbara replied 3 years ago.

I apologize. For some reason, the following sentence did not show up in my initial answer to you.


Further, if you take an early distribution, you will be subject to income tax on the amount withdrawn plus the 10% penalty.


For your reference, the tax rates for single filers for 2013 are as follows:


  • 10%on taxable income from $0 to $8,925, plus
  • 15%on taxable income over $8,925 to $36,250, plus
  • 25%on taxable income over $36,250 to $87,850, plus
  • 28%on taxable income over $87,850 to $183,250, plus
  • 33%on taxable income over $183,250 to $398,350, plus
  • 35%on taxable income over $398,350 to $400,000, plus
  • 39.6% on taxable income over $400,000.
Expert:  Barbara replied 3 years ago.
Hi, Jeremy.

Just a short note to follow up with you to see if you required further information. If so, please come back to me here. If not, please take a moment to rate my answer to you since that is an important part of being an expert on JustAnswer, and I strive for excellence.

Thank you, and best regards,