Question:   Can I withdraw my elective deferrals from a 401(k) plan to build or purchase my first home without paying the 10% additional tax on early distributions?

Answer:   

• Generally, the exception for using retirement funds to build or purchase your first home does not apply to a distribution from a 401(k) plan.
• Elective deferrals to a 401(k) plan are subject to certain distribution restrictions. See Publication 560 Retirement Plans for Small Business, Publication 575 Pension and Annuity Income and Tax Topic 424 401(k) plans.
• 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 is generally subject to a 10% additional tax on early distributions.  There are exceptions to this additional tax, including a distribution from a designated Roth account and a distribution made on account of separation from service after attainment of age 55.  This 10% additional tax is in addition to income tax and other taxes that apply to the distribution.
• Your plan administrator or plan sponsor should have written information about your particular plan (including the availability and applicable requirements of plan loans or hardship distributions) as well as other plan rules.