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Old 05-15-2012, 01:28 PM
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Roth IRA - Housing costs

I contributed a $4,000, $5,000 and $5,000 to my Roth IRA during 2007, 2008, and 2009 respectively. I have a few questions pertaining to how much I can withdraw and for what.

I am purchasing a house for the first time and have read that I can withdraw up to $10,000 to pay for "qualified acquisition costs". I also read in a few places that the money needs to have been in the Roth IRA for 5 years. Does this mean that I can only withdraw the amount that I contributed in 2007? Also, what falls under "qualified acquisition costs"? Is it only a down payment for a mortgage, or does it include inspection fees, appraisal fees, etc.?



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Old 05-15-2012, 11:17 PM
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“I also read in a few places that the money needs to have been in the Roth IRA for 5 years. Does this mean that I can only withdraw the amount that I contributed in 2007? “---->I do not think so. As you said, first-time homebuyers can pull from their Roth IRS for a home purchase; if buyers meet these restrictions, they can withdraw the amount tax-free. The five-year period begins with the tax year in which you made the first contribution to the account, 2007 in your case. So, you,as a first time home buyer ,can only make a withdrawal for the home purchase if the account has been open for more than five years. A first-time homebuyer may take a distribution up to $10,000 per home without paying the10 percent penalty ,I mean early w/d penalty,that is usually applicable for early withdrawals.You can make the withdrawals in installments or on an as-needed basis. Married couples with Roth IRAs may take out a total of $20,000. It is not necessary that the person pulling the money out of a Roth IRA be the homeowner.You may purchase for yourself, spouse, your children or grandchildren, as well as parents or other ancestors.
“Also, what falls under "qualified acquisition costs"? Is it only a down payment for a mortgage, or does it include inspection fees, appraisal fees, etc.?”---->Qualifies acquisition costs mean in addition to the cost to purchase, build or rebuild the home, it may also include closing costs,i.e., Real Estate Broker Commission/Fees, Loan Fees - Direct Loan Costs, Escrows/Impounds/Reserves, or appraisal fee or etc. and fees associated with financing or the contract signing. These payments must be made within 120 days after the funds are withdrawn.



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