Expert: Allen - 2/7/2007

Question
I read that in 1997 Congress made an exception to the 10%  early withdrawal penalty for a number of reasons, one being for first time home buyers of up to $10,000. They, of course, pay the income tax, but not the 10% penalty> Am I correct/advise/Thanks

Answer
You are correct. For details and restrictions go to Section 72(t)(2)(F) and 72(t)(8) of the Internal Revenue Code.

When you receive a 1099R for the distribution make certain it has been coded correctly so the IRS does not come looking for the 10% excise tax.