Questions and Answers

The first-time homebuyer distribution allows IRA distributions to pay qualified home acquisition costs and avoid the 10 percent penalty tax normally assessed if an IRA owner is younger than age 59½ . Traditional IRA distributions would still be subject to income tax. Distributions of Roth IRA earnings for this purpose may not be subject to tax, provided at least five years have passed since the tax year of the IRA owner's first Roth IRA regular/spousal or conversion contribution. An IRA owner may take multiple distributions from either a Roth IRA or a traditional IRA for this purpose. However, the penalty-free (traditional) and tax-free (Roth) distribution amount is limited to $10,000 for the lifetime of each individual.