First-time homebuyer: rollover IRA vs non-rollover traditional IRA
The first-time homebuyer exemption is described as available for traditional IRAs. Does “traditional” include IRAs funded by rollovers from qualified plans for this exemption? A related note is some custodians label IRAs as rollover, others don’t.
Permalink Submitted by Alan - IRA critic on Sat, 2017-03-18 19:58
The penalty exception applies to all types of IRAs, but is limited to 10,000 lifetime per taxpayer. Therefore, it does not matter if your IRA is a rollover IRA or not. Either way, you would claim the exception by filing Form 5329 and entering the exception code for first time homebuyer. Remember, a TIRA distribution is still taxable as the exception only waives the 10% penalty.