IRA Rollover Distribution Rules
Good morning,
In the event that someone has an IRA Rollover, and want to use the funds to purchase their first home – will the 10% early withdrawal penalty for pre-59-1/2 still be waived?
Thank you,
Karey
Good morning,
In the event that someone has an IRA Rollover, and want to use the funds to purchase their first home – will the 10% early withdrawal penalty for pre-59-1/2 still be waived?
Thank you,
Karey
Permalink Submitted by Alan Spross on Wed, 2009-02-25 19:12
Karey,
Yes, up to 10,000 lifetime. Therefore, you must be sure that you meet the definition of a first home buyer, and you have not previously used the amount of this exception. If you are married, each spouse has their own 10,000 to apply to their own IRA accounts.
There are some other requirements as well. The IRA distribution cannot be taken out prior to 120 days from when the expenses are paid. And if the purchase falls through, you also have 120 days to roll the funds back to the IRA. Note that this exception does not apply to loan payments, basically just to down payments and closing costs.
You should also consider the effect of the new stimulus first homebuyer credit up to 8,000. With this credit, you may not need to tap your IRA at all.
Permalink Submitted by [email protected] on Wed, 2009-02-25 19:26
Thank you so much!