Contact UsHusband and wife, both under 59 1/2 looking to purchase first home. 1.Wife wants to take $10k out of her Regular IRA, subject to tax but not 10% penalty, correct? 2.Husband wants to pull $10k out of his Roth IRA. The Roth was previously converted from his 401(k). If he pulls out contribution portion and not earnings, would he then not be subject to either tax or penalty due to the first home buyer exception as well?
3. If he pulls out more than 10k, same on contributions, no tax but 10% penalty correct? If so, penalty on the whole amount or amount in excess of the $10k?
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Tax Professional Answers
John Stancil
1. That is correct. You will not be subject to tax or penalty on up to $10,000 withdrawn for purchase of a home if you qualify as a first time buyer.
2. That is also correct, assuming that you only withdraw contributions.
3. If you withdraw more than $10,000, you will not pay tax on the withdrawal up to the amount of your contributions. And the first $10,000 will not be subject to penalty. Any withdrawal above $10,000 will be subject to the 10% penalty and tax on withdrawals represented by earnings.
I would also remind you that this is a once-in-a-lifetime exclusion. Once you use $10,000 as a first time homebuyer, you cannot utilize this provision again. However, each of you is allowed a $10,000 withdrawal for this purpose.
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512 weeks ago
2. That is also correct, assuming that you only withdraw contributions.
3. If you withdraw more than $10,000, you will not pay tax on the withdrawal up to the amount of your contributions. And the first $10,000 will not be subject to penalty. Any withdrawal above $10,000 will be subject to the 10% penalty and tax on withdrawals represented by earnings.
I would also remind you that this is a once-in-a-lifetime exclusion. Once you use $10,000 as a first time homebuyer, you cannot utilize this provision again. However, each of you is allowed a $10,000 withdrawal for this purpose.