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About Carole Dunton
Expertise
Preparation of individual income tax returns including social security, pensions, lump sum distributions, sale of personal residence, stock and mutual fund sales, distributions from individual retirement accounts, moving expenses and itemized deductions. General knowledge of schedule C for small sole proprietorships. No experience in corporate, estate, partnership or large business returns.

Experience
9 years as tax preparer for major national firm.

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Tax Law (Questions About Taxes) - 401K

Expert: Carole Dunton - 11/6/2009

Question
Tax wise is it a good idea to pull a 401K out now to purchase a home when you are over 60 and what percent is it taxed?

Answer
Hi,

If you withdraw money from a 401(k) you will pay ordinary income tax, at whatever rate your total income, deductions and exemptions dictate. If your state has a state income tax, you will pay that in addition to Federal income tax.

If you qualify to claim the first time homebuyer's credit you would have a 10% credit (maximum $8,000) to offset the taxes. That applies only to the Federal tax, not to your state.

To qualify for the credit you can't have owned a home within 3 years. They are talking about a credit for those who are not first time homebuyers. It would be about $6,500 but it hasn't been signed yet so I can't give you any details.

Regards,
Carole

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