what is the maximum you can take early distribution from a Roth IRA for a purchase...

what is the maximum you can take early distribution from a Roth IRA for a purchase a home without a penalty?

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Expert Solution

To withdraw earnings without paying taxes or penalties, you must follow very specific rules. The first requirement is that the withdrawal must be taken five years or more after the account was opened. The IRS counts the five years from the first day of the tax year in which you make your first Roth contribution. In other words, if you open the account on Nov. 1, 2017, the IRS actually starts the clock at the beginning of the tax year, that is, Jan. 1, 2017 (when the IRS gives you a gift like that, you take it).

If you satisfy the time requirement, the IRS says distributions qualify to be both income-tax and penalty free if:

the money is used to buy, build or rebuild a first home, up to a $10,000 maximum that is spent within 120 days of the withdrawal
the money is withdrawn because you suffered a disability
the money is distributed to your beneficiaries or to your estate after you die

When a withdrawal fits these requirements, it is called a “qualified distribution.”

ekkarill92 answered 10 months ago

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