homebuyer – 1st time
To qualify for 72(t)(2) exception for first-time homebuyers, is it okay
to purchase home in February and withdraw money in March?
Code seems to indicate 120 period, but does purchase have to be after the withdrawal?
Thanks
To qualify for 72(t)(2) exception for first-time homebuyers, is it okay
to purchase home in February and withdraw money in March?
Code seems to indicate 120 period, but does purchase have to be after the withdrawal?
Thanks
Permalink Submitted by Alan Spross on Thu, 2008-02-21 23:29
Yes, that’s OK as long as you apply the funds within 120 days of distribution. You could close on the house with other funds, then realize you have been left strapped for cash and then take the distribution to reimburse yourself. But if you do this the distribution should be in the same calendar year as the purchase.
If you withdraw the funds and the purchase falls through, you also have 120 days to roll it back to the IRA rather than the usual 60.
In fact, there does not even have to be a purchase, because the exception can also apply to the building of a house on your own lot or the rebuilding of an older home. In that case there would be no purchase closing and you would still qualify for the exception, but should keep good records and not take out the funds until you are ready to pay the direct expenses of the work. Again, try to keep all this within one calendar year to avoid possible inquiries over specific dates of expenses.