IRA Rollover

Archive for July, 2007

Question: Early IRA withdrawals for a house down payment?

My wife and I are getting ready to put a down payment on our first house, and I know that I can take a $10K withdrawal from a traditional IRA penalty-free. What I don’t know is, can my wife ALSO do this (we file jointly). Also, I know that there is a similar (but slightly different ) rule regarding Roth IRA’s. Does anybody know if I can do all three ($10K from my rollover IRA, $10K from my wife’s rollover, and $10K from my Roth)?

I tried looking at the instructions for IRS form 5329, and found them utterly baffling. HELP!!!

Answer: Your “taxpayer unit” (you AND your wife) can only take a maximum of $10,000 for the “first-time homebuyers exemption” from all of your Traditional IRA’s without being subject to the penalties.

You can also withdraw any amount of your Roth IRA that YOU HAVE CONTRIBUTED. For example, if you’ve got a Roth IRA that is worth $10,000, and you’ve contributed $7,500 and it has grown by $2,500 since you started it, you can withdraw the $7,500 that YOU contributed to it, any time, for any reason, without penalty. (This is one of the advantages of a Roth IRA vs. a traditional IRA).

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