A:

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
(
Contact Denise)

RELATED FAQS

  1. How can I get a "pensionado" visa to retire in Costa Rica?

    Find out how to apply for a pensionado retirement visa for Costa Rica, how to prove your income and obtain a certificate ...
  2. When is litigation better than mediation in a high net worth divorce case?

    Learn the variables in a divorce case that most often determine whether mediation or litigation is a better path for the ...
  3. Why are high net worth divorces considered more challenging than other divorce cases?

    Learn about some of the complexities and common pitfalls associated with divorce proceedings involving high-net-worth individuals.
  4. Which states are the most expensive for high-income earners?

    Find out why states such as California, Hawaii and New York are such expensive places to live, even for those residents who ...
RELATED TERMS
  1. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  2. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  3. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  4. Medigap

    Also called Medicare Supplement Insurance, Medigap is health ...
  5. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  6. Gold IRA

    Definition of Gold IRA

You May Also Like

Related Articles
  1. Professionals

    5 Signs That You Have a Lousy 401(k) ...

  2. Entrepreneurship

    Why Small Business Owners Need Financial ...

  3. Savings

    Investing: How to Make Fast Money in ...

  4. Professionals

    How the Robo-Advisors Differ (& How ...

  5. Professionals

    Target Date Funds: More Popular, Cheaper ...

Trading Center