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After carefully reviewing ALL of the rules and regulations regarding the Roth IRA, I am convinced that one can open a Roth, invest $2000/year for a five year period, then pull out all the money (contributions and earnings) tax and penalty free if it goes toward the purchase of a new home. Is that true? Am I missing something?

If I am correct, what type of fund do you suggest for this goal?
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Drs,

<<After carefully reviewing ALL of the rules and regulations regarding the Roth IRA, I am convinced that one can open a Roth, invest $2000/year for a five year period, then pull out all the money (contributions and earnings) tax and penalty free if it goes toward the purchase of a new home. Is that true? Am I missing something?

If I am correct, what type of fund do you suggest for this goal?>>

Yes, you are correct. If the fund has been open for at least five tax years, then up to $10K in a lifetime may withdrawn for a first-time home purchase. That will be a qualified distribution from the Roth, which means no earnings will be taxable on that distribution.

To me, if you intend to do that and won't leave the money invested for at least seven or more years, then you should put it in something "safe" like T-Bills, short-term bonds, money market funds, CDs or the like. You know you will spend it and you will need it for the purchase, so you don't want to take risks with the principal. Put it in stocks, and at the end of five years you could have a loss. Longer than five years, and the odds improve that that won't happen.

Regards…..Pixy

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