johntalmadge.wright@[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?
Beware of getting tax advice from your H.R. department.
What is all-im****tant is the distribution code on the 1099-R you (and
the IRS) will receive. If it is code "1", and the IRA box is not
checked, you will pay an early-distribution penalty (10% federal plus
possibly some amount for state) in addition to regular tax.
In other words, to answer your question about "front-loaded", no, you
are not right. If you don't elect appropriate withholding, and don't
make estimated tax payments or increase other types of withholding, you
will most likely have an underpayment penalty on your tax return(s) in
addition to the early-distribution penalty.
-Mark Bole
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