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Author: churchie Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: 401K/403b to direct roll to IRA Date: 3/22/1999 5:53 PM
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I had a 401K and 403b (totalling $6K)that I directly rolled into a traditional IRA. It is my understanding that I can withdrawl up to 10K from the IRA for a first time home purchase, tax and penalty free.

Since I invested the 6K, the IRA is now worth 10K as a result of some good stock picks. I never added any other money to it since I rolled it over.

Can I take out the whole 10K tax free or without penalty for the first time purchase of the house? Or do I have to pay tax on my gains?

thanks!
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12974 of 121219
Subject: Re: 401K/403b to direct roll to IRA Date: 3/26/1999 10:42 PM
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[[I had a 401K and 403b (totalling $6K)that I directly rolled into a traditional
IRA. It is my understanding that I can withdrawl up to 10K from the IRA for a
first time home purchase, tax and penalty free.]]

Penalty free? Perhaps...if you follow the rules. Tax free? No way. The distribution will STILL be subject to taxes. You can read more about the first time homebuyer penalty exclusion in the Taxes fAQ area. You really should check it out.

[[ Can I take out the whole 10K tax free or without penalty for the first time
purchase of the house? Or do I have to pay tax on my gains?]]

Again, I think that you have a bad misconception as to how the first time homebuyer penalty exclusion actually works. You really should read my FAQ in the Taxes FAQ area. And then if you have any additional question, post 'em here.

TMF Taxes
Roy

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Author: churchie Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13192 of 121219
Subject: Re: 401K/403b to direct roll to IRA Date: 3/29/1999 2:00 PM
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Thanks for the pointer to the faq.

So according the law, it doesn't matter how much the original rollover amount appreciated, if I were to withdrawl the whole 10K, I would add that amount to my gross income and pay taxes on all of it without an additional 10% penalty.

Correct?

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13451 of 121219
Subject: Re: 401K/403b to direct roll to IRA Date: 4/2/1999 12:49 AM
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[[ So according the law, it doesn't matter how much the original rollover amount
appreciated, if I were to withdrawl the whole 10K, I would add that amount to
my gross income and pay taxes on all of it without an additional 10% penalty.

Correct?]]

Sorry...but I don't remember the original question. So if you could give me a recap of your question, and your new understanding based upon the reading of the FAQ articles, I'll be happy to try and lead you in the right direction.

TMF Taxes
Roy

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