On Apr 18, 11:55 am, johntalmadge.wri...@[EMAIL PROTECTED]
wrote:
> My wife and I are looking to buy a house; we are hoping to drawdown on
> my retirement savings, as first-time buyers, for the down payment.
> Here’s the catch: I know we can draw down an IRA penalty-free for a
> home purchase, but my investments are in a 403b. Is it legally
> possible for me to rollover my funds into a Traditional IRA, expressly
> for the purpose of drawing those funds down penalty-free? Also, I
> assume the disbursement is taxed at filing time, not front-loaded
> (netting down the disbursement) and adjusted at tax time. Am I right?
> Finally, how quickly can this process take place?
>
> Thank you all for your responses.
Many 403b plans allow a distribution for the first time purchase of a
home. Start by asking the plan administrator, hopefully they are well
versed in their plans distribution rules (hard****p and otherwise). If
they are an "empty uniform", consult your summary plan document. The
rules are generally the same as those of a 401k.
There is likely no need to employ an IRA, which is good because you
probably can't. Typically, qualified plans do not allow for in-service
withdrawals while employed. Loans and hard****p distributions are
standard but not required.
As for taxation: Any distribution will be subject to ordinary income
tax. The "$10k house rule" only gets you out of paying the 10% early
withdrawal penalty. The 10% penalty is not "front-loaded and adjusted
at tax time". However, the IRS mandates that 20% be withheld from non-
qualified distributions. I do not THINK this can be avoided even for
home purchases. Check with your plan admin.
The time it takes is totally dependent on your 403b plan provider.
Customarily, you must submit a distribution request to the plan admin.
The admin then confirms that the paperwork is in good order and you
are eligible for the request being made. They then notify the plan
provider (like John Hancock or Fidelity) who issues a check for the
funds. 5-10 business days is normal.
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