Now, the real question (although you haven't asked): is this a good idea?BruceM---BruceM:Thanks for the reply. The below is my follow-up response posted on the Tax Strategies board. Would appreciate your follow-up comments/thoughts (on the Roth withdrawal issue).--Hhttp://boards.fool.com/Message.asp?mid=25245635From my example, I believe this will be the withdrawal steps & consequences:1. $7,500 after-tax contributions: tax and penalty free2. $10,000 conversion: tax and penalty free, since I have paid the tax when converting and I'm applying this amount for qualified home purchase *3. $2,500 dividend and reinvestments: taxable and 10% penalty* Nuances from No. 2:2. (a) If my conversion had been $7,500, then the whole amount will be tax and penalty free plus I can add the $2,500 dividend and reinvestments penalty-free to be applied for the home purchase and have only to pay taxes on the $2,500 portion2. (b) If my conversion had been $12,500, then I can only withdraw $10,000 tax and penalty free, to be applied for home purchase but the remaining $2,500 would be tax free but penalized.Are those assumptions 2.a. and 2.b. correct?It's not the performance that prompted me to consider of withdrawing/closing the account but - barring unlikely mishaps - it is very unlikely that DW and I will be eligible to contribute additional amounts to our Roths. We both have maxed our 401ks and practical LBYM-ers so I'm not too worried of missing the advantages from Roth. Additionally, both of our works place stringent restrictions on flexibility and investment options so administratively, it is quite a hassle to deal with our compliance teams with little or no marginal benefits. And finally, living in SF Bay Area, we can use any amount to add to our house down payment, despite only $10-20k.If my above assumptions are correct, I'm planning to withdraw No. 1 and 2 up to the non-penalized amount (Uncle Sam will have to wait really long before I give him $250-500 for nothing), and keep the $2,500-5,000 residuals in our Roths until we have satisfied the 5 year minimum rule.
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