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Tax Planning/Roth IRA Withdrawal


Hi Owen,

I'm going to purchase my first home. I would like to use part of my Roth IRA for the down payment. I have had the Roth IRA for about 2 years. I converted it over from a regular IRA which I had for about 3 years. I only want to use about 3-5 thousand dollars from my Roth IRA. I have about 8,000 in my Roth IRA today and only 1,500 of that amount is from gains. Could I use my Roth IRA to help with my down payment without incurring fees? Thank you for your time.


Joe, under IRC code section 72(t)(2)(F), distribution from an IRA to purchase a first home, is allowable up to $10,000, without incurring the 10% early withdrawal penalty.  That is a lifetime limit.  A first-time homebuyer is an individual that has not owned a principal residence for at least two years.  If you are married, both of you must qualify as first-time homebuyers.

I believe that when you withdraw from the IRA, part of what you take out will be pro-rated.  In other words, you may have some tax on the gain, but no early withdrawal penalties.

I hope this helps.

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As an Enrolled Agent, I am fully capable of providing tax advice as it relates to personal and business income taxes. Enrolled Agents are the only Federally licensed tax practitioners and are admitted to practice before all administrative functions of the IRS. My specialty is working with small business owners who file Schedule "C" and helping them to structure their business in such a way as to maximize as many tax advantages as possible. I also enjoy working with individuals who have both routine as well as complex tax situations. I prefer to concentrate on individuals and small business tax planning.


I have a 25 year background in financial services including tax, bookkeeping, insurance, real estate and securities. I was previously the Chief Financial Officer of a local and national franchise organization. I am currently semi-retired, but used to own (in partnership with another EA) an individual and small business financial engineering firm where I work with nearly 2,500 individuals and small business owners in nearly every state and almost every continent, assisting them in all aspects of their tax and financial well-being. I have prepared or reviewed more than 8,000 tax returns in my career.

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Enrolled Agent, Admitted to Practice Before the IRS, Accredited Tax Preparer, Fellow of National Tax Practice Institute, Certified QuickBooks ProAdvisor (1999-2011), Sleeter Group Certified QuickBooks Consultant, Life & Disability Insurance Agent License (California, Texas, Maine), Real Estate Agent License (California); Many years of continuing education in all these fields.

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