Greetings, Sharon000, and welcome. You asked:<<I believe that IRA money can now be used to buy a first home or pay for college tuition, without penalty. Does anyone know if 401k money can also be used for a downpayment on a home or college tuition, without penalty?>>You are correct that penalty-free withdrawals may be made from an IRA to pay for a first-time home purchase (subject to a lifetime limit of $10K) or to pay the expenses of a higher education. These penalty-free withdrawals do not exist for 401k plans. Instead, as noted by GP703, you may borrow from your plan (assuming loans are permitted and subject to certain monetary limitations) for these purposes. In general, these loans must be repaid within five years; however, home loans may be as long as 15 years. There are no tax or penalty implications for a 401k loan. OTOH, again as noted by GP703, you might qualify for a hardship distribution for these expenses depending on the terms of your plan document. (You will have to have used all available loans first, though.) If so, the distribution will be taxed and it will be penalized assuming you're younger than age 59 ½.. You will also be precluded from making contributions to the plan for 12 months after the distribution.Regards….Pixy
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