Today TaxMama hears from Matthew in California who begs leave… “I withdrew money from my IRA for a first time home purchase. The amount was over $10,000, the lifetime maximum. Can any of the portion over the $10k mark be attached to my wife’s name? In effect, could we get a $20K early withdrawal penalty exemption for both of us, even though the IRA account was in my name?”
What a wonderful idea!
Why don’t you suggest that to your US Congressfolk? Perhaps they can include it in their next round of tax confusion – I mean tax simplification.
Unfortunately, you hit the target when you said it was YOUR IRA. The first word of IRA is “Individual” – Retirement Account. It’s your account, not a joint account.
Unfortunately, you are, indeed limited to one $10,000 shot at a down payment.
However, your might be entitled to one of the homebuyers’ credits – especially the First-Time Homebuyers Credit. http://www.taxquips.com/index.php?id=1460 That may help overcome the pain of the IRA penalty.
Also, consider reading the instructions to Form 5329, the penalty form. http://www.irs.gov/pub/irs-pdf/i5329.pdf
On page 3, you will find a list of codes for exceptions to the 10% early withdrawal penalty. Perhaps one or more exceptions apply to you?
And remember, you can find answers to all kinds of questions about IRA penalties and other tax issues, free. Where? Where else? At TaxMama.com.