Roth IRA Distribution to buy a house/sixty day rollover
Client wants to withdraw $30k from Roth IRA, first time home buyer
$20k Contributions
$10K Earnings, comes out penalty free
Within sixty days, wants to put back $20k
can client?
if so how much?
if so what is the ordering rule?
thank you
Dean
Permalink Submitted by Alan - IRA critic on Thu, 2020-01-09 23:15
If he qualifies for a 60 day rollover, the 10,000 distributed will be from regular contributions. If client does not have a 10,000 regular contribution balance, then conversions come out next starting with the oldest. If he does not roll any of the 30,000 back, the usual Roth IRA ordering rules will determine if there is tax or penalty on the total distributed. The first home exception allows up to 10,000 of earnings to be distributed tax free as a qualified distribution or to use the 10,000 for a penalty waiver if taxable conversions are distributed. If the deal falls through client has 120 days to complete the rollover.