- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Roth funds as down payment on first home
Posted on 8/25/11 at 11:12 am
Posted on 8/25/11 at 11:12 am
Am I correct that you can use funds in a Roth IRA as a downpayment on your first home without penalty? How is this done to avoid the taxes?
Also, what should I do with my Roth money for the next 12 months until I buy? (It would be only part of the down payment and is currently only about 5k). Thanks!
Also, what should I do with my Roth money for the next 12 months until I buy? (It would be only part of the down payment and is currently only about 5k). Thanks!
1
Posted on 8/25/11 at 11:42 am to Costanza
Pretty sure you can't take money out until after 59.5 or there will be a penalty.
Posted on 8/25/11 at 11:55 am to GoCrazyAuburn
quote:
Pretty sure you can't take money out until after 59.5 or there will be a penalty.
Why confuse the situation if not 100% sure?
Posted on 8/25/11 at 12:06 pm to Dusty Bottoms
quote:
Why confuse the situation if not 100% sure?
Sorry my simple answer confused you.
To the OP, here are some qualifications. Also, you are correct on the first time home-buyer thing. I had not heard of that.
Qualifying Reasons for Distributions
The following are the “qualifying reasons for distributions” referenced in the first step of the flowchart:
¦You have reached age 59½.
¦The distribution was made to your beneficiary after your death.
¦You are disabled.
¦You use the distribution to pay certain qualified first-time homebuyer amounts.
5-Year Rule
Any earnings distribution prior to the first day of the fifth year after your first Roth was established will be taxed as ordinary income, at whatever your tax rate is at the time.
Example: You open a Roth IRA on May 18, 2009. The 5-Year Rule will be satisfied as of January 1, 2014.
Posted on 8/25/11 at 12:12 pm to GoCrazyAuburn
You didn't confuse me. The first answer just wasn't right.
Here is the decision tree on whether the distribution would be qualified.
LINK
Here is the decision tree on whether the distribution would be qualified.
LINK
This post was edited on 8/25/11 at 12:19 pm
Posted on 8/25/11 at 12:34 pm to GoCrazyAuburn
quote:
Pretty sure you can't take money out until after 59.5 or there will be a penalty.
For a traditional IRA, that is correct. For a Roth that applies to any earnings on your contributions. Contributions you make can be taken out of a Roth with no penalty at any time for any reason. After all, you've already paid tax on it.
For example, you contribute $5000 in 2000. In 2001 you contribute $5000 and make $500 in interest. You can withdraw $10000 without penalty regardless of age. The remaining $500 is subject to restrictions.
Example 2: You contribute $5000 in 2000. In 2001 you contribute $5000 but lose $500 playing the market. Your account value is $9500, which is less than your contribution amount. You can withdraw every penny without restriction.
Posted on 8/25/11 at 12:57 pm to foshizzle
quote:
foshizzle
Well done.
Posted on 8/25/11 at 3:07 pm to TheHiddenFlask
Thank you.
I think the first-time homebuyer exemption refers to a traditional IRA, not sure if it applies to Roth earnings.
But Roth contributions can be withdrawn for hookers and blow at age 21 without any penalties or withholding. There's a little paperwork to file but that's about it.
I think the first-time homebuyer exemption refers to a traditional IRA, not sure if it applies to Roth earnings.
But Roth contributions can be withdrawn for hookers and blow at age 21 without any penalties or withholding. There's a little paperwork to file but that's about it.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News