A first time home buyer can withdraw $10,000 from his Roth IRA to buy his first home without penalty. But for a married couple, would the spouse need to be a first time home buyer too in order for the husband not to be penalized? For example, husband is a first time home buyer but wife is not. Can the husband take $10,000 from his Roth IRA to buy a home without penalty?
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I don't see why the spouse should matter.
If it is his IRA and he is the homebuyer.Evan Appelman, EA -
What TTB satys
The way I read page 13-3 the answer is yes he is ok to not pay a penalty on $10,000. If his first Roth contribution was made 5 years or more ago he may be eligible for penalty free and tax free treatment as well.Comment
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This appears to be a pretty clear explanation:
Believe nothing you have not personally researched and verified.Comment
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I believe the penalty would apply.
IRC §72(t)(8) contains in part:
(i) First-time homebuyer
The term "first-time homebuyer" means any individual if--
(I) such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence during the 2-year period ending on the date of acquisition of the principal residence to which this paragraph applies,
You can also take a look at Olup TCS 2005-180Comment
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Specifically IRC §72(t)(8)(D)(i)(I)
That does appear to apply, doesn't it? Live and learn! The Smart Money article seems to say the same thing if you follow through to its link on exceptions:
What good is having a mind, if you can't change it?Evan Appelman, EAComment
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I agree
I looked it up in Lasser's and it is clear both must qualify.Comment
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How much of the $$ is from contributions?
It is still possible the withdrawal would be penalty (and tax) free - depending on if the $10,000 was from contributions, conversions or earnings.
It would not qualify under the first time homebuyer rule, but might under the ordering rules for withdrawals.Last edited by abby; 10-24-2012, 02:13 PM.Comment
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