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I have now thoroughly confused myself so I hope a fellow Fool can clarify for me.....

I am thinking of openening a Roth IRA but I also plan on buying a house in 1 1/2 to 2 years. I most likely will need the $3000 I use to open an IRA as down payment money when I do buy but it is possible that I won't. I want to plan for a Foolish retirement and open my IRA now but I am afraid I will incur taxes and penalties if I try to withdraw my money for a new house downpayment before the 5 year time frame is up.

Now if I understand correctly what I just read I can withrdaw my contributions (not earnings, just contributions) from my Roth at any time, even before the 5 year time frame is up, penalty and tax free.

Is this so? What am I missing here? Any advice from more informed Fools would be most welcome.

Thanx.
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Now if I understand correctly what I just read I can withrdaw my contributions (not earnings, just contributions) from my Roth at any time, even before the 5 year time frame is up, penalty and tax free.

Is this so? What am I missing here? Any advice from more informed Fools would be most welcome.


Contributions to a Roth IRA can be withdrawn tax and penalty free at ANY time.

Acme
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Check this at the IRS website, but I also believe that you can withdraw up to $10K from a Roth IRA penalty free for the downpayment on a first home.

Adenovir
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Small in comparison but your Roth IRA account may have low account balance fees you'll get stuck with if you end up withdrawing most of your balance for a down payment. This should have little, if any, impact on your decision but I wanted to throw it out there as a reminder.
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The 5-year timeframe has to do with money that was converted from a traditional IRA, not contributions made directly to the ROTH. Contributions can be taken out at any time, as another poster stated.

HTH
3MM
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