UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Next Thread
Author: kungfuBBQ Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 26  
Subject: Housing equity allowance Date: 7/27/2006 6:46 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I have around $40,000 in my retirement account that is designated housing equity. My wife has around $10,000. Technically, I am supposed to be able to withdraw this money whenever I would like and not be subject to penalties or taxes. However, there is some confusion as to whether I can withdraw this amount all at once. Is there a limit to how much I can withdraw and when? How do I find the relevant information. I have done google searches and looked at the IRS documents but I am still at a loss.

Peace,
Nate
Print the post Back To Top
Author: zipper103 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17 of 26
Subject: Re: Housing equity allowance Date: 7/29/2006 7:57 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Why not call your CPA or other tax preparer?

Print the post Back To Top
Author: kungfuBBQ Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18 of 26
Subject: Re: Housing equity allowance Date: 7/29/2006 5:42 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
It turns out that most CPAs don't have much training in this area. As it turns out none of the CPAs that I have talked to are able to give me consistant answers.

Print the post Back To Top
Author: acm4tax Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19 of 26
Subject: Re: Housing equity allowance Date: 7/30/2006 12:07 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
May I suggest you check out B J Worth's web site. I've been to her seminar a couple of times and have bought her reasonably priced book. In fact several of my minister clients bought her book also and found it to be a terrific resource for all the answers to their questions.

www.worthfinancial.com/whoweare.html

Print the post Back To Top
Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 20 of 26
Subject: Re: Housing equity allowance Date: 7/30/2006 11:29 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I have around $40,000 in my retirement account that is designated housing equity. My wife has around $10,000. Technically, I am supposed to be able to withdraw this money whenever I would like and not be subject to penalties or taxes.

I'm not familiar with the term "designated housing equity."
What I have seen is that some churches and related organizations specifically designate retirement benefits payable from their retirement plans as housing allowance. I'm most familiar with the Methodist and Episcopal church's arrangements.

Is there a limit to how much I can withdraw and when?

That depends on the terms of the plan. It sounds like you have a 401(K) or 403(b) plan. Many churches also have defined benefit plans for clergy and other employees.

The amount that be withdrawn free of income tax, as housing allowance,
in any year, is the least of:

* The amount designated as housing allowance. (No problem here, if the entire amount of benefits from the plan is so designated.)

* The actual amount spent to maintain your home.

* The fair rental value of your home (applies if you live in church-owned property.)

An extra twist can arise when there are multiple plans paying benefits, which can happen if you've been working throughout the country, and your church has different plans for different regions. You have to aggregate the retirement benefits designated as housing allowance, to see if a part of the total is taxable, which can often be the case.

Bill

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: kungfuBBQ Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21 of 26
Subject: Re: Housing equity allowance Date: 8/2/2006 2:32 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
My CPA is telling me that if I use the money to buy a home I can only exempt from taxes what counts for fair rental value, because that is the lesser of the three options. He claims that the house I buy would be understood by the IRS as a parsonage. Is that true?

Peace,
Nate

Print the post Back To Top
Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22 of 26
Subject: Re: Housing equity allowance Date: 8/2/2006 2:39 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
My CPA is telling me that if I use the money to buy a home I can only exempt from taxes what counts for fair rental value, because that is the lesser of the three options. He claims that the house I buy would be understood by the IRS as a parsonage. Is that true?

Peace,
Nate

____________________________________________
As long as the rental value is the least of the three, then yes, I agree. In a given year, though, the actual housing expenses you incur may be lower than if you rented, I've often found.

And a "parsonage" can be a house you own, as well as one provided by the church; definitely.

Bill

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Next Thread
Advertisement