Many people dip into their 401(k) or traditional IRA for a down payment on their first home. However, doing so forces them to pay taxes and penalties for withdrawing the funds before they reach age 59 ½. With a Roth IRA, individuals can withdraw contributions and earnings up to $10K (couples can withdraw up to $20K) tax and penalty free, as long as the account has been open for 5 years.
A major perk of the Roth IRA is that the owner of the account doesn’t have to be the first-time homebuyer; you can give the money to a spouse, child, or grandchild. However, it must be the buyer’s primary residence.
If you want more information about how to open a Roth IRA account, please contact me as I know of an outstanding financial service professional I would be happy to refer you to!
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