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Subject:  Re: Roth IRA - 1st time home purchase Date:  4/26/2001  7:22 PM
Author:  BookmFool Number:  29343 of 78166

Hello 1Student1:
...but am still fuzzy on whether or not you can withdraw from a Roth within 5 years for a first time home purchase. It sounds like you can withdraw your contributions without any penalty, but would have to pay tax on the earnings if they were withdrawn within 5 years.

Not only would you be taxed at your marginal tax rate, but also pay a 10% early withdrawal penalty as well.

My sister is 25 and has yet to start saving in an IRA or 401(k). In addition, she would like to purchase a home in the next 2 years. Would it be wise to still open a Roth now, take out her conributions in 2 years and leave the earnings there?

She's permitted to remove the contributions, but what type of investments will she be pu