Can I take money out of my rollover IRA for a downpayment on a house?
Sure you can. You can do anything you want with your IRA money. It’s yours. BUT….. you must know the consequences of what you do and how you do it. There are consequences for every action we take (or don’t take). If you are a first-time home buyer, you can withdraw up to $10,000 from your IRA if you are under the age of 59 1/2 and not have to pay the early withdrawal penalty of 10% of the amount taken out. To be a first-timer, you cannot have owned a home in the last two years. If you owned a home previously but sold it and rented for more than two years, you qualify. You can also use the money for buying the first home for a child, grandchild or parent. Keep in mind that this rule only allows you to avoid the penalty, not the income tax due. If your combined federal and state tax bracket is 30%, you’re going to lose $3000 of that 10K (instead of 4k with the penalty) so you need to carefully consider if it’s worth it. There is one other thing to know. You must actually use the money
