Will I be penalized for cashing in my 401k?

Q. I changed jobs in 2003. Based on the new purchase of a primary residence and to pay for the down payment, I had to cash in my 401K account from my previous employer. Will I still have to pay the 10% penalty on the disbursement even though it was used to purchase a primary residence? --Bob, Boston

The following answer was provided by Wesley Rickard CPA, Quin, Rickard, Lipshires, & Grupp LLP, Norwood.

A. Sorry, but if you are under age 59 1/2 and more than 60 days has gone by since you pulled out the funds (you could have rolled the funds into your IRA to avoid the taxes and penalty) you will not only pay federal and state ordinary taxes but the federal 10% penalty tax as well.