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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: IRA withdrawal for home buying Date: 10/19/2001 5:46 PM
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Does the inspection we had done on the house (not required by our lender) figure as a "qualified cost"? That was $225.

I'd say that it does.

If I understand your collective wisdom correctly, if we did withdraw too much we can simply do the math and then deposit the excess back into the IRA within 60 days of the disbursement and still avoid the 10% penalty.

Not only will you avoid the penalty, you'll avoid having to pay tax on that amount - if there was any to pay.

How am I doing now? :)

Much better, I trust.

Oh - your first question.
However, the sellers gave us $1,500 in closing costs. Is that "counted" for the IRA withdrawal?

I'm not sure, to be quite honest. If the final settlement accounting describes it as seller paid costs, or something to that effect, I'd say that it reduces your eligible expenses. If it is more general description, like seller allowance, then I'd argue that it was a reduction in the price of the house, not a reduction in your eligible expenses. But it sounds to me like it won't matter, anyway.

Another thought - if before the 60 days is up, you find that you have some extra cash (OK - when you stop laughing, keep reading), you can put that back into the IRA as well. You'll cut down the income taxes due on the withdrawl (even thought it might already be penalty-free) and keep more of your retirement savings intact.

Best wishes on the new house!!

--Peter
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