Most people know that they can take money from thier 401K plans at age 59 1/2 without penalty fees.  This may be the time for those close to retirement to be looking for that home and community they want to live in when they do retire.  Before you get to far in this process, determine if you will need to be paying tax on the money you withdraw.  It is an easy mistake to forget that the money in your 401k is pretax contributions and therefore becomes taxable when you withdraw it.  The income bracket you are currently in is the determining factor in how much tax you will need to pay and if this is the right time to withdraw from your 401k to buy the retirement home of your dreams.