As first-time home buyers (my husband sold his house in 2014, and I haven't owned a home in over seven years) would the 10 percent penalty be waived if I were to withdraw funds from my traditional IRA for a down payment on a house?
The first-time home buyer exception applies if the person buying the residence, and your spouse if married, must have not had an ownership interest in a principal residence during the two-year period ending on the date that the new home is acquired.
Further, the lifetime limit for exception to the 10 percent penalty for a first-time home buyer is $10,000.
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Answered by: Paul K. Rudoy, CPA, PFS, is managing partner of H2R CPA in Pittsburgh, Pa.