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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13343
Experience:  15years with H & R Block. Divisional leader, Instructor
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If I take out my lump sum pension and buy a home and used

Customer Question

If I take out my lump sum pension and buy a home and used the money for down payment will I still had to pay the 20% for taking it out?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello

The distribution from a deferred pension account (the money in the account has not been taxed yet) is added to income in the year of the distribution. The tax is applied in that year no matter what you do with the money (like home purchase).

Some exceptions apply for the extra 10% penalty (when you are not 59 1/2) but the tax is applied and no exception from taxation is offered.

In short, yes, you still have to pay tax on a distribution even if you purchase a home with the funds.

Please advise if you need more information or rating in a positive way is acceptable.

Expert:  Robin D. replied 1 year ago.

If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed), if you need more information reply below.