First time home buyer, penalty/tax free?
Summary of Main Problem and Solutions:
- The user, Kelaum, is concerned about withdrawing $9,000 from their Roth IRA, specifically whether they can do so penalty-free after only having the account for 8 months.
- Withdrawals of contributions to a Roth IRA can be made at any time without penalty or tax, as taxes have already been paid on those contributions.
- For a withdrawal to be considered “qualified” (tax-free and penalty-free), the account must be owned for at least 5 years, and it must meet specific conditions, such as being for a first-time home purchase (up to $10,000).
- It is recommended that Kelaum consults a tax professional to review their specific situation and determine the best course of action.
Here’s the full thread
Hi! I have a question regarding my withdrawal from my Roth IRA. I’m planning to be withdrawing $9,000 and I saw that one of the conditions to withdraw penalty/tax free would be to buy a home. However I only had my account opened for around 8 months, would this affect anything or could I withdraw without any penalties?
Thank you, I hope you guys get back to me.
Thank you for the question, @Kelaum. I’ll be happy to give you some information.
First, you can withdraw contributions to a Roth IRA at any time without penalty or tax because you’ve already paid taxes on the money. However, “Qualified” withdrawals (also called “qualified distributions”) that include earning from a Roth means you get your money tax-free and penalty-free. For your withdrawal to be considered qualified, you must:
– Own your Roth for 5 years AND withdraw under one of the following circumstances:
– First-time home purchase (up to $10,000)
You can read more here: https://www.fidelity.com/building-savings/learn-about-iras/ira-early-withdrawal
I highly recommend asking a tax professional so they can review your specific situation and help you determine the best course of action.
Congratulations on buying the new home! What an exciting time. I want to share a few more items that you may find helpful.
How to buy a house for the first time: https://www.fidelity.com/learning-center/smart-money/how-to-buy-a-house
Learn: Buying or selling a house: https://www.fidelity.com/learning-center/life-events/selling-and-buying-house
If you have additional questions, please let us know. We’re happy to help. 🟢
Gotcha, that makes a lot of sense now. Thank you!