IRA for Home

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 k mark be attached to my wife’s name?
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  In effect, could we get a $20K early withdrawal penalty exemption for both of us, even though the IRA account was in my name?”


Dear Matthew,

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 ,000 shot at a down payment.
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However, your might be entitled to one of the homebuyers’ credits – especially the First-Time Homebuyers Credit. https://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. https://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?
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And remember, you can find answers to all kinds of questions about IRA penalties and other tax issues, free.
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Where? Where else? At TaxMama.com.

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  • Ask TaxMama :: Where taxes are fun and answers are free
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  • TaxQuip #1460 :: Form 5405 – Homebuyers Credits
  • IRS Form 5329 :: Penalty for Retirement Account Withdrawals
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