ROTH IRA/ Housing Purchase

[Raybyrnes]

What are the rules for using a Roth IRA for a home purchase. By remaining on the sidelines and not purchaseing a home it has freed up our cash flow to fund both mine and my wife’s Roth IRA’s. We are now past the 5 year threshhold and some of the accounts and I am looking to see how much of these funds might be available to be used when we do look to purchase. Can anyone weigh in on this?

[SD Realtor]

Ray I am not positive about this but I believe your IRA has to be self directed.

This is a huge CPA question and I bet our friend FSD, while not a CPA will have insightful commentary here.

That said, my uninformed opinion is that in order for a property or trust deed or anything of that sort to be held by the IRA you need to find an entity that will allow you to move your IRA into a self directed IRA. Thus the title is actually held by the IRA. It is pretty complex but I think you get the idea of what I am talking about.

Now if you are talking about using some of the IRA money to help with a downpayment or something of that nature then it is an entirely different conversation. Basically you are taking a loan out. There are tax laws and implications as well as interest to payback but again, this is a CPA question even though there will most likely be many helpful responses to your post.

SD Realtor

[surveyor]

I also heard that if you are using an IRA to purchase real estate, you cannot leverage, which is one of the main advantages of real estate.

[jyurasek02]

This is a little off topic, but I have the following concern. What about some of the tax implications of rolling over a Traditional into a Roth. Are all of the amounts taxed at you income rate?

My income will be about 60K this year. I rolled over about 30K in 401K from previous emplyer into Traditional IRA’s,and then converted into Roth IRA’s. I elected to withhold the standard 10%, however, I am wonering if at tax time I will owe the remaining 18% to the IRS. Can anyone help me on this one?

[jyurasek02]

This is a little off topic, but I have the following concern. What about some of the tax implications of rolling over a Traditional into a Roth. Are all of the amounts taxed at you income rate?

My income will be about 60K this year. I rolled over about 30K in 401K from previous emplyer into Traditional IRA’s,and then converted into Roth IRA’s. I elected to withhold the standard 10%, however, I am wonering if at tax time I will owe the remaining 18% to the IRS. Can anyone help me on this one?

[jyurasek02]

This is a little off topic, but I have the following concern. What about some of the tax implications of rolling over a Traditional into a Roth. Are all of the amounts taxed at you income rate?

My income will be about 60K this year. I rolled over about 30K in 401K from previous emplyer into Traditional IRA’s,and then converted into Roth IRA’s. I elected to withhold the standard 10%, however, I am wonering if at tax time I will owe the remaining 18% to the IRS. Can anyone help me on this one?

[jyurasek02]

This is a little off topic, but I have the following concern. What about some of the tax implications of rolling over a Traditional into a Roth. Are all of the amounts taxed at you income rate?

My income will be about 60K this year. I rolled over about 30K in 401K from previous emplyer into Traditional IRA’s,and then converted into Roth IRA’s. I elected to withhold the standard 10%, however, I am wonering if at tax time I will owe the remaining 18% to the IRS. Can anyone help me on this one?

[jyurasek02]

This is a little off topic, but I have the following concern. What about some of the tax implications of rolling over a Traditional into a Roth. Are all of the amounts taxed at you income rate?

My income will be about 60K this year. I rolled over about 30K in 401K from previous emplyer into Traditional IRA’s,and then converted into Roth IRA’s. I elected to withhold the standard 10%, however, I am wonering if at tax time I will owe the remaining 18% to the IRS. Can anyone help me on this one?

[surveyor]

I also heard that if you are using an IRA to purchase real estate, you cannot leverage, which is one of the main advantages of real estate.

[surveyor]

I also heard that if you are using an IRA to purchase real estate, you cannot leverage, which is one of the main advantages of real estate.

[surveyor]

I also heard that if you are using an IRA to purchase real estate, you cannot leverage, which is one of the main advantages of real estate.

[surveyor]

I also heard that if you are using an IRA to purchase real estate, you cannot leverage, which is one of the main advantages of real estate.

[Raybyrnes]

Sorry, I am going to requalify the question. I wish I could start thinking about purchasig realestate inside of my IRA. That is not what I was talking about.

What I am referring too is that I believe I am eligible to withdraw funds from my Roth IRA penalty free for the purchase of a home. I believe it might also be on first homes only. I think that there is still a requirement that the funds need to have been in the IRA for 5 years.

Each successive year I wait to buy provides me additional opportunities to tap into the Roth to help with my Downpayment etc. I am also wonderingif ther is a cap on how much you can pull out.

[Raybyrnes]

Sorry, I am going to requalify the question. I wish I could start thinking about purchasig realestate inside of my IRA. That is not what I was talking about.

What I am referring too is that I believe I am eligible to withdraw funds from my Roth IRA penalty free for the purchase of a home. I believe it might also be on first homes only. I think that there is still a requirement that the funds need to have been in the IRA for 5 years.

Each successive year I wait to buy provides me additional opportunities to tap into the Roth to help with my Downpayment etc. I am also wonderingif ther is a cap on how much you can pull out.

[Raybyrnes]

Sorry, I am going to requalify the question. I wish I could start thinking about purchasig realestate inside of my IRA. That is not what I was talking about.

What I am referring too is that I believe I am eligible to withdraw funds from my Roth IRA penalty free for the purchase of a home. I believe it might also be on first homes only. I think that there is still a requirement that the funds need to have been in the IRA for 5 years.

Each successive year I wait to buy provides me additional opportunities to tap into the Roth to help with my Downpayment etc. I am also wonderingif ther is a cap on how much you can pull out.

[Raybyrnes]

Sorry, I am going to requalify the question. I wish I could start thinking about purchasig realestate inside of my IRA. That is not what I was talking about.

What I am referring too is that I believe I am eligible to withdraw funds from my Roth IRA penalty free for the purchase of a home. I believe it might also be on first homes only. I think that there is still a requirement that the funds need to have been in the IRA for 5 years.

Each successive year I wait to buy provides me additional opportunities to tap into the Roth to help with my Downpayment etc. I am also wonderingif ther is a cap on how much you can pull out.

[Raybyrnes]

Sorry, I am going to requalify the question. I wish I could start thinking about purchasig realestate inside of my IRA. That is not what I was talking about.

What I am referring too is that I believe I am eligible to withdraw funds from my Roth IRA penalty free for the purchase of a home. I believe it might also be on first homes only. I think that there is still a requirement that the funds need to have been in the IRA for 5 years.

Each successive year I wait to buy provides me additional opportunities to tap into the Roth to help with my Downpayment etc. I am also wonderingif ther is a cap on how much you can pull out.

[(former)FormerSanDiegan]

I believe that you can withdraw your contributions from a Roth IRA for any purpose without penalty. This rule applies to the contributions only not the earnings.

[(former)FormerSanDiegan]

You can withdraw $10,000 penalty free (and this can include earnings) for a first time home purchase. This is penalty-free if you’ve had the Roth for more than 5 years and can include earnings. The 10K limit applies to each individual, so if there are two of you you could take 20K out.

Most likely you have $10K of contributions and shouldn;t even bother with the paperwork of indicating the use as first-time home purchase. Remember you can take out your contributions at any time penalty-free for any purpose. The exception is that funds that are contributed as a ROllover need to be vested for 5 years before doing so.

For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[(former)FormerSanDiegan]

You can withdraw $10,000 penalty free (and this can include earnings) for a first time home purchase. This is penalty-free if you’ve had the Roth for more than 5 years and can include earnings. The 10K limit applies to each individual, so if there are two of you you could take 20K out.

Most likely you have $10K of contributions and shouldn;t even bother with the paperwork of indicating the use as first-time home purchase. Remember you can take out your contributions at any time penalty-free for any purpose. The exception is that funds that are contributed as a ROllover need to be vested for 5 years before doing so.

For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.

[(former)FormerSanDiegan]

You can withdraw $10,000 penalty free (and this can include earnings) for a first time home purchase. This is penalty-free if you’ve had the Roth for more than 5 years and can include earnings. The 10K limit applies to each individual, so if there are two of you you could take 20K out.

Most likely you have $10K of contributions and shouldn;t even bother with the paperwork of indicating the use as first-time home purchase. Remember you can take out your contributions at any time penalty-free for any purpose. The exception is that funds that are contributed as a ROllover need to be vested for 5 years before doing so.

For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.

[(former)FormerSanDiegan]

You can withdraw $10,000 penalty free (and this can include earnings) for a first time home purchase. This is penalty-free if you’ve had the Roth for more than 5 years and can include earnings. The 10K limit applies to each individual, so if there are two of you you could take 20K out.

Most likely you have $10K of contributions and shouldn;t even bother with the paperwork of indicating the use as first-time home purchase. Remember you can take out your contributions at any time penalty-free for any purpose. The exception is that funds that are contributed as a ROllover need to be vested for 5 years before doing so.

For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.

[(former)FormerSanDiegan]

You can withdraw $10,000 penalty free (and this can include earnings) for a first time home purchase. This is penalty-free if you’ve had the Roth for more than 5 years and can include earnings. The 10K limit applies to each individual, so if there are two of you you could take 20K out.

Most likely you have $10K of contributions and shouldn;t even bother with the paperwork of indicating the use as first-time home purchase. Remember you can take out your contributions at any time penalty-free for any purpose. The exception is that funds that are contributed as a ROllover need to be vested for 5 years before doing so.

For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.

[(former)FormerSanDiegan]

I believe that you can withdraw your contributions from a Roth IRA for any purpose without penalty. This rule applies to the contributions only not the earnings.

[(former)FormerSanDiegan]

I believe that you can withdraw your contributions from a Roth IRA for any purpose without penalty. This rule applies to the contributions only not the earnings.

[(former)FormerSanDiegan]

I believe that you can withdraw your contributions from a Roth IRA for any purpose without penalty. This rule applies to the contributions only not the earnings.

[(former)FormerSanDiegan]

I believe that you can withdraw your contributions from a Roth IRA for any purpose without penalty. This rule applies to the contributions only not the earnings.

[SD Realtor]

Ray I am not positive about this but I believe your IRA has to be self directed.

This is a huge CPA question and I bet our friend FSD, while not a CPA will have insightful commentary here.

That said, my uninformed opinion is that in order for a property or trust deed or anything of that sort to be held by the IRA you need to find an entity that will allow you to move your IRA into a self directed IRA. Thus the title is actually held by the IRA. It is pretty complex but I think you get the idea of what I am talking about.

Now if you are talking about using some of the IRA money to help with a downpayment or something of that nature then it is an entirely different conversation. Basically you are taking a loan out. There are tax laws and implications as well as interest to payback but again, this is a CPA question even though there will most likely be many helpful responses to your post.

SD Realtor

[SD Realtor]

Ray I am not positive about this but I believe your IRA has to be self directed.

This is a huge CPA question and I bet our friend FSD, while not a CPA will have insightful commentary here.

That said, my uninformed opinion is that in order for a property or trust deed or anything of that sort to be held by the IRA you need to find an entity that will allow you to move your IRA into a self directed IRA. Thus the title is actually held by the IRA. It is pretty complex but I think you get the idea of what I am talking about.

Now if you are talking about using some of the IRA money to help with a downpayment or something of that nature then it is an entirely different conversation. Basically you are taking a loan out. There are tax laws and implications as well as interest to payback but again, this is a CPA question even though there will most likely be many helpful responses to your post.

SD Realtor

[SD Realtor]

Ray I am not positive about this but I believe your IRA has to be self directed.

This is a huge CPA question and I bet our friend FSD, while not a CPA will have insightful commentary here.

That said, my uninformed opinion is that in order for a property or trust deed or anything of that sort to be held by the IRA you need to find an entity that will allow you to move your IRA into a self directed IRA. Thus the title is actually held by the IRA. It is pretty complex but I think you get the idea of what I am talking about.

Now if you are talking about using some of the IRA money to help with a downpayment or something of that nature then it is an entirely different conversation. Basically you are taking a loan out. There are tax laws and implications as well as interest to payback but again, this is a CPA question even though there will most likely be many helpful responses to your post.

SD Realtor

[SD Realtor]

Ray I am not positive about this but I believe your IRA has to be self directed.

This is a huge CPA question and I bet our friend FSD, while not a CPA will have insightful commentary here.

That said, my uninformed opinion is that in order for a property or trust deed or anything of that sort to be held by the IRA you need to find an entity that will allow you to move your IRA into a self directed IRA. Thus the title is actually held by the IRA. It is pretty complex but I think you get the idea of what I am talking about.

Now if you are talking about using some of the IRA money to help with a downpayment or something of that nature then it is an entirely different conversation. Basically you are taking a loan out. There are tax laws and implications as well as interest to payback but again, this is a CPA question even though there will most likely be many helpful responses to your post.

SD Realtor

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