You and your spouse each qualify for a penalty-free distribution of up to $10,000 for the purchase, acquisition or construction of your principal residence or first home. By IRS standards, you are a first-time homebuyer if you did not own an interest in a principal residence during the two years prior to the purchase of a new home. Further, because it has been five years since you established your first Roth IRA, and the distributions will be used towards the purchase, acquisition or construction of your principal residence or first home, the distribution meets the requirements of a "qualified distribution" and will be tax- and penalty-free.

For more information, see the section on distributions in our Roth IRA Tutorial.

This question was answered by Denise Appleby
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