Catherine Posted November 18, 2014 Report Share Posted November 18, 2014 Is the $10,000 exclusion from the additional 10% penalty for early IRA withdrawal per person - or per couple? IRA's are individual - but home purchases are done by couples. So does the couple get $10,000 withdrawal excluded, or $20,000 withdrawal excluded, from that additional 10% penalty? Every client before these folks have been individuals buying houses... TIA, Catherine Quote Link to comment Share on other sites More sharing options...
jklcpa Posted November 18, 2014 Report Share Posted November 18, 2014 The $10K exclusion from the penalty is per person, and each of them would file their own form 5329 showing the appropriate exclusion code filed with the joint return 2 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted November 18, 2014 Report Share Posted November 18, 2014 WIth each $10,000 coming out of each spouse's IRA. Not $20,000 all from one spouse's or any other combo. 2 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted November 18, 2014 Report Share Posted November 18, 2014 Sorry about not including what Lion added to make it completely clear. I thought it was obvious since each person would be filing their own Form 5329, so the form would limit the amount excepted from the penalty, limited to the amount of the withdrawal up to the max exclusion of $10K, whichever is less. Of course, each person must qualify to be a first time homebuyer too to be eligible for the exception. Quote Link to comment Share on other sites More sharing options...
Catherine Posted November 18, 2014 Author Report Share Posted November 18, 2014 Thanks for confirming! Quote Link to comment Share on other sites More sharing options...
Lion EA Posted November 18, 2014 Report Share Posted November 18, 2014 Yep, those little details we understand. But, the client sometimes hears what they want to hear. So, even if one spouse doesn't have $10,000 in their IRA, they might think they can take all $20,000 however they want. I try to say it at least three different ways to clients! 2 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted November 19, 2014 Report Share Posted November 19, 2014 Client - "What do you mean I have to pay taxes on that money? I thought if I used it to buy a home I did not have to pay taxes on it!!!! I am sure that is what you told me" Client - "But a 401K is the same as an IRA. So I took the money out the the 401K, what is the difference?" Gottal Love them clients. Tom Hollister (Soon to be Newark), CA 5 Quote Link to comment Share on other sites More sharing options...
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