Rep. John McGuire Introduces Home Savings Act

WASHINGTON, D.C. — Today, U.S. Representative John McGuire (VA-05) introduced the Home Savings Act. This bill will remove penalties for withdrawing from a 401(k) account when the money is used for closing costs and down payments associated with purchasing a home. 

"For many, owning a home is the American dream but it's been out of reach for far too long," said Congressman McGuire (VA-05). "Too many Americans are becoming lifelong renters. This bill will pave the way for removing financial barriers to home ownership. Family members aiding their relatives with closing costs and down payments aren't just funding a house, but a home for generations to come. This Act is ending a cycle of throwing away money in renting and helping young people invest in their future."

Background:

• The Home Savings Act amends the Internal Revenue Code of 1986 to permit penalty-free withdrawals from a 401(k) account for up to five years when the funds are used for a down payment or closing costs on a primary residence. The Act also allows an individual to make a penalty-free 401(k) withdrawal and gift those funds to a relative, exempt from gift tax, provided the relative uses the money for a down payment or closing costs on a primary residence. 

Read the full bill text here.