Penalty-Free IRA Withdrawals for First-Time Home Buyers
If you've just bought your first house, you and your spouse can both withdraw up to $10,000 from your IRAs without penalty.
My wife and I are about to purchase a new home. Can we spread the $10,000 withdrawal the IRS allows across my IRA and hers? --L.F., Brooklyn, N.Y.
You can withdraw up to $10,000 from your IRA penalty-free for a first-time home purchase, and your wife can also withdraw up to $10,000 from her IRA penalty-free. The withdrawals from each IRA will be taxable (except any portion attributable to non-deductible contributions).
With Roth IRAs, you can withdraw contributions tax- and penalty-free anytime. And after you withdraw your contributions, you can each withdraw up to $10,000 in earnings as long as you haven’t exceeded the $10,000-per-person limit for all IRAs. If you haven’t held a Roth IRA for at least a five-year period, the earnings will be taxable.
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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
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