401K early distribution for first home purchase?
My Client withdrew $10,000 from his 401k to purchase a home, but he closed on may of 2009. Since the purchase did not occur until 09 he paid the 10% tax penalty plus taxes for the 401k distribution on his 2008 income tax return. Can I amend his 2008 return to avoid the penalty? The money was used to purchase the house. Was there a time limit to close on the house in order to avoid the penalty?