Early Distribution from Traditional IRA for First Time Home Buyer

Submitted by Brendon Dashiell on Thu, 2016-10-13 14:11

Hi,

I have a case I am looking at with a client who is looking to purchase his first home. The client is looking to purchase a home with two of his friends (all would be living in the home). Would he still qualify for the first time home buyer exemption for an early distribution from a Traditional IRA? Would there be any issues if he lived there for a year or two, then started renting out the property?

Thanks



Submitted by Alan - IRA critic on Thu, 2016-10-13 19:34

This would qualify for the penalty waiver as long as the client understands the 10k penalty waiver is a one time benefit. He would have to file a 5329 to claim the exception to the early distribution code on the 1099R.

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