IRA Rules

Posts Tagged ‘ira’

Question: How do I use my IRA to help buy my first home?

I know you can withdrawal money from an IRA for a first home purchase and related costs without the early withdrawal penalty, but how and when? I can’t find any details on the web other than you can do it and the money has to be used within 120 days of withdrawal.

I bid on a HUD home, if the bid is accepted can I withdrawal the money now to pay for appraisals, inspections, and other related costs? Do I just keep receipts for the end of the year to prove I used the money for purchasing a home?

Thanks in advance for the help, this is all new to me and a little stressful.

Answer: See IRS Form 5329 and instructions. That is where you account for exceptions to 10% penalty. Just be prepared to back it up if audited.

Note that you will still owe income tax on the distribution.

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Question: Withdrawal of excess contributions to IRA – which form?

I contributed too much to my Roth IRA for 2007.. I withdrew the excess last week. What form do I use to report the capital gain, Sch D or something else?

Answer: It isn’t a capital gain. The earnings go on line 21 as “other income”–you also need form 5329 to figure the penalty.

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