How Do You Use A Traditional IRA For A First Time Home Purchase?
Individual retirement accounts, or IRAs, are tax-deferred retirement savings accounts. Dollars in these accounts are deposited on a pretax basis, meaning contributions are deductible against income for the current year. Upon withdrawal, all proceeds are fully taxable at ordinary income tax rates. Accessing IRAs before age 59 1/2 incurs a 10 percent IRS penalty except for qualified hardship withdrawals. Buying a first home is a qualified hardship withdrawal. Locate your IRA statement. You’ll need to find the customer contact information for the investment holding company. Contact the company holding your IRA to request the withdrawal. This is best done via phone so that the customer service representative can verify your information and process the request promptly. Request a hardship withdrawal for a first-time home purchase. You need to tell the customer service representative that this is a qualified hardship withdrawal and not a distribution that will be subject to the IRS penalty.
