Hi guys,

As my post title states, I have a question regarding the use of IRA funds on your first home purchase.

From my understanding, an individual can withdraw up to $10,000 from a traditional IRA w/o paying the 10% penalty to make their "first" home purchase. You can also withdraw up to $10,000 from a Roth IRA's earnings w/o paying the 10% penalty.

So for example, if I had 2 traditional IRA accounts with over $10,000 in each and a Roth IRA with over $10,000 in earnings, could I withdraw $10,000 from each traditional IRA account and my Roth IRA's contributions + $10,000 in my Roth IRA's earnings?

I want to try to preclude any comments about how absurd of an idea this is by stating that I am not planning to do this, but I just wanted to get a better understanding about the rules.

Thanks.

Nope. It's $10K allowable for IRA contributions. Period. It doesn't matter how many accounts it comes from.

Look at it this way: if the contribution limit for IRAs is $5K for all accounts combined, why would they make the rule different for money going out from the rule for money going in?

Anyway, RIRAs are a different kind of animal. You can get your contributions out anyway regardless of the reason but as for the earnings, it has to be in the account for 5 years or it's taxable.

And don't forget that you have to buy your home within 120 days of withdrawing it or your withdrawal is basically disqualified from being a first time home buyer exemption.

It's kind of hard to tease all that info out from IRS Publication 590 so I did some looking around and I think that Bankrate's IRS rules for early IRA withdrawals does the best job of summarizing what you need to know.

I am doing this. My understanding is that you can use $10,000 total per person. So my husband and I can each withdraw $10,000 penalty free for a first home purchase. You can also withdraw for education (no limit).

This is true. That $10K limit is per person. But as stated above, not $10K per account.

Thanks for the clarification.

... to continue this train of thought.

It's 10k for each spouse, BUT can I take 20k from my IRA account and claim 10k exclusion for me and 10k exclusion for my spouse.

If that is not clear... I am asking if my spouse can use my IRA (in my name) for the "First Time Home Buyer Exclusion."

Thanks in advance!

Technically you can, and 10k of earnings will count for the "first" time home buyer and the second $10k will be distributed based as non-qualified distribution (with the ordering rules applying to a Roth IRA). The second $10k cannot ever count for your spouse's "first" time home buyer distribution when taken from an account with your name on it. 1099's will be issued to an individual, and each individual will have to work through a form 8606.

So when you say "Technically you can" you mean "No"?