You can take a LOAN from your 401(k), but you can WITHDRAW up to $10K from an IRA for a 1st time home purchase. The withdrawal is not necessarily tax-free, but you are exempt from the normal 10% early-withdrawal penalty.

 

Ok, I asked. We can only put in 9K because of "testing" done by the IRS. Every year they take everyone above a certain pay level and everyone below and see how much the two groups contribute. They have to contribute the same amount. That's why we are limited at 9K. A couple years ago they gave everyone in the lower bracket $150 because the testing did not work out. This is a law made to stop companies from only offering 401K to executives. Oh, and you're right the max is 13K.

 

Also, you can make a withdrawl from your 401K for a hardship. These include purchase of a house, medical bills not paid by insurance, education for you or a dependant, if you've been evicted from your primary residence, or they are forcloseing on your house. You can only take what you have contributed and none of the match. You pay a 10% penalty and you pay income tax on it as well. Anyone can make a withdrawl but loan programs are different from plan to plan. We cannot take a loan on our 401K.

 

yes it is true.....