First Time Home Buyer
With all the changes recently want to double check.
For a first time home buyer (under 59.5 years old)
Is $10,000 of withdrawals from a traditional IRA or earnings from a Roth not subject to the 10% penalty?
With all the changes recently want to double check.
For a first time home buyer (under 59.5 years old)
Is $10,000 of withdrawals from a traditional IRA or earnings from a Roth not subject to the 10% penalty?
Permalink Submitted by Alan - IRA critic on Wed, 2021-04-14 18:37
For traditional IRA distributions, the penalty is waived up on up to 10,000 (lifetime limit) of taxable income.
For a Roth distribution, the rules are much more complex. The 10,000 limit also applies (including amounts applied to TIRA above), but Roth distributions may involve both the penalty waiver for distributions of conversions under 5 years under the ordering rules, or of gains under the ordering rules. Or for those who first made any Roth contribution over 5 years ago, the 10,000 can be reported on line 20 of Form 8606 to waive both the penalty and the income tax by treating up to 10,000 as a qualified Roth distribution. However, if the Roth IRA regular and conversion basis is enough to cover the first home distribution, there is nothing gained by entering an amount on line 20.