How Do You Use Roth IRA To Buy A House?
A Roth IRA is an individual retirement account that allows investors who meet the specific requirements to withdraw their earnings free of tax. Though investors do not receive tax deductions when they contribute to the account, they do avoid being taxed upon withdrawal. Normally, a 10% early-withdrawal penalty is enforced if funds are drawn upon before age 59 1/2, but there is an exception for first-time home buyers. Step 1 Open a Roth IRA. One can do this by selecting a broker to assist with transactions. When an investor is ready to open an account, the broker will usually point him to an online application to fill out. Normally applicants will have to print out a page, sign it and mail it in with the first deposit check. Once the account is established, the broker may set up electronic fund transfers so the investor can regularly contribute without having to mail in a check each month. Step 2 According to Roy Lewis of the Motley Fool, after the account has been open for five years,
