Question:   Can I withdraw my elective contributions to a 401(k) plan penalty free to build or purchase my first home?

Answer:    

• Elective contributions to a 401(k) plan are subject to certain distribution restrictions.  See Publication 560, Publication 575 and Tax Topic 424.
• Generally, the exception for using retirement funds to build or purchase your first home does not apply to a distribution of your elective contributions from a 401(k) plan.
• If you are under the age of 59 1/2, a distribution (including a distribution of employer matching and profit sharing contributions) from your 401(k) plan subject to a 10% additional tax on early distributions.  This 10% additional tax is in addition to other taxes that apply to the distribution.
• However, a 401(k) plan may permit loans and hardship distributions.  Depending on the terms of your 401(k) plan, you may be able to receive a loan or hardship distribution to build or purchase your first home.
• Your plan administrator or employer should have written information about your particular plan (including the availability of loans or hardship distributions and applicable requirements) as well as other plan rules.