I know this is not your particular case but it may help others. If you are over 55 and under 59 1/2 and retired, you can begin to take withdrawals from your 401 K without penalty. This is not the case for an IRA, You will pay a penalty withdrawing from an IRA before 59 1/2. Therefore, if you are younger than 59 1/2 and want to withdraw money for a down payment you need to do it from a 401 K. If you are older then it is wiser to transfer the money to an IRA and withdraw it from there for the tax savings.
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