I am going to need money from my IRA for a down payment. Is it taxed different than normal withdrawal verses for first time home owner purchase.
Congratulations on your home purchase! Before dipping into your IRA, you will want to make sure that you speak with an accountant and understand the tax implications. Traditional IRA distributions are subject to ordinary income tax. In addition, if you are younger than age 59, a 10% tax penalty typically applies. Meaning, not only would you pay ordinary income tax on the amount withdrawn,but, you would also pay a 10% penalty on top of that! If this is your first home, there may be an exception to the 10% penalty. You may be able to withdraw up to $10,000 penalty free, but, you will still have to pay income tax on that amount. Please be sure to consult your accountant to ensure that you clearly understand the tax impact.
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