You may be in luck! One of the exceptions to the 10% penalty is that the early distribution was used for payment of a house OR if you do not qualify for that, it may be a hardship distribution. You should speak to a CPA or tax attorney to determine if you qualify.
Andrew B. Gordon, Esq., CPA
Andrew B Gordon is a CPA and attorney licensed to practice law in Illinois. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.
While you may have been eligible for a hardship distribution for the purchase of the house, unfortunately the hardship does not avoid income tax and the early withdrawal penalty of 10%. There is a first time homebuyer exception to the early withdrawal penalty but this is for distributions from an IRA, not a 401(k) plan. Unfortunately you will have to pay the penalty.