Bipartisan House bill would allow tax-free, penalty-free 401(k) withdrawals for home purchases
Key points
- Representatives Steube and Panetta introduced the bill on October 29
- The bill would allow penalty-free withdrawals from 401(k), 403(b) and 457(b) plans for down payments and closing costs
- Withdrawals would be capped at $40,000 or 40% of the vested balance; the bill remains at the proposal stage
On October 29, Representatives Greg Steube and Jimmy Panetta introduced the Homeownership Opportunity Act, with Representative Mike Carey as an original cosponsor. The bill would allow penalty-free early withdrawals from 401(k), 403(b) or 457(b) plans for down payments and closing costs on a primary residence, excluded from gross income. Withdrawals would be capped at $40,000 or 40% of the vested balance. The bill remains at the proposal stage.
What employers should do
- Monitor the bill's progress; if enacted, assess the need to adjust plan withdrawal rules
Policy details
- Jurisdiction
- US federal
- Status
- Proposed rule
- Effective date
- —
- Employers covered
- Employers offering 401(k), 403(b) and 457(b) plans and their participants
- Official source
- View official source ↗
Original report: 401(k) Specialist ↗Edited with AI assistance. Facts are based on official sources and original reports. For information only; not legal, immigration or insurance advice.