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<< So, my question is: can i take the $10,000 out of my converted Roth and use the money for a down payment on a first home and avoid the 10% early withdraw penalty as well as the tax? >>

Yes. You'll be withdrawing only conversion contributions. As you note, you've already paid the tax, and the penalty is waived when the funds are used for a qualifying first-home purchase.

As for the "too good to be true" part, remember that you have no way to get this money back into a retirement account. That's the major drawback to using IRA funds to finance your home purchase.

Phil Marti
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