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Financial Planning / Tax Strategies
|Subject: Re: IRA First Home Exception and two kids||Date: 3/29/1998 6:08 PM|
|Author: KATinChicagoland||Number: 3113 of 121219|
<<As I now understand it, I have up to 10K$ to use, without the 10%additional tax, for all my kids' first homes. That isn't much, but is better then nothing. Does my wife also have the 10K$ limit or is she bound by my distribution? We file jointly.>>
As I understand the rule, you would each have a separate $10,000 limit even if you file jointly -- but you may want to wait for further guidance on this question before relying on this result.
Another point I should have mentioned in my previous post. You mentioned the possibility of having the first child repay the amount you provided for the home purchase so it would be available for the second child. As I noted, you can't recontribute this amount to your IRA. But of course you can set these dollars aside in a non-IRA account, and unless there are many years between the time your first child repays this amount and the time your second child needs it to buy a home, it won't make much difference that it wasn't in the IRA in the meantime.
You should also be aware that if you qualify for a Roth IRA, and the home purchase is at least five years away, you can get an added benefit when the IRA is used for a first-time homebuyer. This particular use of a Roth IRA is the only one that permits tax-free withdrawals before age 59-1/2 (apart from death or disability). If you meet all the requirements, this choice may provide a much more efficient use of your money than if you use a regular IRA and take a taxable (but non-penalty) distribution for this purpose.
KAT in Chicagoland
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