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Thanks for providing enough information for an answer. Any numbers I use are the ones you used. Substitute the actual numbers.

Is the $4709 from the traditional IRA taxable? Subject to penalty?

Yes, it's fully taxable. See below for the penalty discussion.

Is the $5300 from the Roth taxable? Subject to penalty? (I did not meet the 5-year rule)

$3300, the remaining untaxed 1998 conversion, is taxable in 2000. It was accelerated because of the nonqualified distribution, and you will not have to include the final 1/4 in your 2001 return, because you've already paid tax on it. Your remaining basis in the Roth IRA is $1300 ($6600 converted minus $5300 withdrawn).

The Part III entries:

17. $5,300 (amount withdrawn)
18d. -0- (conversions don't count here)
20a $6,600 (1998 conversion)
20b $3,300 (1998 conversion taxed in '98-'99)
20c $1,650 (1998 conversion due in 2000)
23 $6,600 (basis from the conversion, now that it's been taxed.)

The rest is math

What about the extra $9 over the $10,000 maximum for 1st time home purchase?

The entire distribution from both traditional and Roth is subject to the premature distribution penalty. Thus, show the total distribution (not just the taxable portion) on the 5329, subtract your $10,000 exclusion, and you'll have $9 subject to the 10% penalty. They'll give you an installment agreement if you can't come up with the 90 cents.

Phil Marti
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