Use of Roth IRA Proceeds for First Time Home Purchase

Dec 24, 2018 1 Replies

My daughter and son-in-law purchased their first home this year. My daughter withdrew funds from her Roth IRA for part of the down payment.



I thought the rules were that you can withdraw all of your contributions, plus up to $10,000 of gain tax and penalty free toward a first time home purchase. I am reading an article that indicates you can only withdraw a total of $10,000. That doesn't make sense to me. I would think they mean all contributions plus up to $10,000 of gain. My daughter has had her Roth IRA for more than five years. She withdrew more than $10,000 but not more than contributions plus $10,000 gain.



Can someone please confirm.


Because the 5 year period has elapsed, she can withdraw up to $10K (a lifetime amount) of EARNINGS tax-free and penalty free if she meets the definition of being a first time homebuyer. It is considered a qualified distribution. She would not be distributing earnings until she first distributes her contributions. So... your interpretation is correct.

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