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<<I know that Uncle Sammy allows me to withdraw up $10,000 from a Tradtional IRA towards a "first-time" home purchase.>>

Right...with some restrictions. You can read more about the first time home purchase issues in the Taxes FAQ area ( But these distributions will be subject to taxes. You'll simply avoid the penalties.

<< Furthermore, I know that in order to do similarly with a Roth IRA, the Roth IRA must be at least five years old.>>

Right again...but again with some restrictions. And again, this is discussed in detail in my series on Roth IRAs in the Taxes FAQ area. Unlike the traditional IRA rules, if you make a qualified distribution from your Roth IRA (hold for more than five tax years...which are different than five calendar years), any distribution would be free from tax AND penalties.

But even if you take a taxable distribution from your Roth IRA, if you meet the first time homebuyer qualifications, you'll still dodge the penalty.

<<Is there any such stipulation for the Traditional IRA first-time home purchase withdrawal?>>

Nope. Any distributions from a traditional IRA would be subject to tax based upon the IRA distribution rules. All you'll avoid is the penalty.

<< My Foolish plan is to convert some 401(k) money I happen to have at my disposal right now to a Traditional IRA and use it this summer to close on a house--if it can be done.>>

Sure it can be done. You'll avoid the penalty. You'll not avoid the tax. The only way that you would avoid both the tax and the penalty would be to take your traditional IRA, convert it to a Roth IRA (and pay taxes on the conversion income in the year of conversion), wait five tax years, and then take the distribution.

But either way you'll be paying the's just a question of when.

TMF Taxes

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