IRA Rules

Posts Tagged ‘2010’

Question: Traditinoal IRA First-time home buyer tax treatment?

Hi,

My wife and I are looking to purchase our first home in the next couple of months and want to clarify this questions before ‘game day’.

I understand the surface rules of the IRS Traditional IRA penalty waiver for First-Time home buyers. The IRS basically allows a $10,000 distribution penalty free for the purchase of your first home.

The question I have goes a little deeper and doesn’t seem to be covered on the IRS’s website:
If I am the only one (between my spouse and I) who owns a Traditional IRA, AM I ABLE TO TAKE OUT $10,000 FOR THE BOTH OF US OUT OF MY IRA?

The IRS’s website states:
“If both you and your spouse are first-time home buyers, each of you can receive distributions up to $10,000 for a first home without having to pay the 10% additional tax.”
What if she doesn’t have an IRA, and we are utilizing my IRA…would I be able to pull $20,000 for the both of us out of MY IRA?

Thank you in advance for any help.

Answer: You would each have to have IRA’s to be able to take out $10,000 for each of you. So you would only be able to take $10,000 out of your IRA for the first-time home buyers without the 10% penalty.

Laura H – H&R Block – Senior Tax Advisor 5
**This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.

2010 Tax Law Changes with financial retirement expert, Bill Smith!

Question: Can I fund a Traditional IRA with pretax dollars?

I’m not sure if the rules stipulate I have to use after-tax income to fund a traditional IRA.

Answer: There isn’t a mechanism set up to fund your Trad. IRA with pre-tax dollars – you have to wait and take the appropriate deduction when you file your taxes.

Retirement Savings – Compound Interest and the Rule of 72