Since you are beyond age 59.5, there is no penalty on 401k or IRA distributions, so the first home exception for IRA distributions is immaterial in your case. Distributions from either the plan or a rollover IRA would be taxable, but not subject to penalty. In the year you reach 70.5, you must begin required minimum distributions from either your 401k (if not still working) or from a rollover IRA. You could use this taxable RMD money for home purchase purposes. If you need to withdraw more than your RMD, you can, but all withdrawals are taxable unless you made after tax contributions to your 401k. There is a special rule that allows your first RMD to be postponed to 4/1 after the year you reach 70.5 if you wish and you will save on taxes if you try to spread out your income from your last year of work using the RMD options to keep to much taxable income from occurring in a single year. If you retire mid year or late in the year, you would likely be better off to postpone your first RMD to the next calendar year, even though that will cause your second RMD to also come out in that calendar year. Because of these planning opportunities, the time of the home purchase should be adjusted to prevent you from having too much taxable income in a single year. The other variable is how much of the home purchase you will finance since paying cash will likely require a higher distribution unless you have other savings outside your retirement accounts.

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