traditonal ira for new home
Client has 401k, which he can move in May 2017.
a. If we move to an IRA, can he take out of the IRA money for a New House purchase, without penalty of pre 591/2 (this would not be their first home, which they sold a long time ago…they have been renters)?
b. If we leave the 401k (he is not working with that company any longer) is there a way to take out money to purchase a house?
thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Fri, 2017-02-03 01:23
They qualify as first time homebuyers as long as neither of them has owned a main residence in the 2 years before the distribution. Therefore, they would qualify for the penalty waiver which they claim using Form 5329. The penalty waiver applies only to IRA distributions, not to 401k distributions.