@kalenebernhardt wrote:
If you withdraw from a Roth for first time home purchase, will you still be taxed on the amount as income?
When you withdraw from a Roth, you are treated as withdrawing contributions first, conversions second, and earnings last. Withdrawal of contributions is never taxed. Sometimes, a withdrawal of a conversion is subject to a 10% penalty, and withdrawal of earnings is always subject to a 10% penalty if you are under age 59-1/2. Withdrawal of earnings is also subject to regular income tax if you are under age 59-1/2. How your particular withdrawal is taxed is based on the makeup of funds in your specific Roth IRA.
So for a Roth IRA, the first time homebuyer exception means that if you withdraw contributions, they are tax free, as always. If you withdraw a prior conversion that is subject to the 10% penalty, you can be exempt from the 10% penalty for the conversion withdrawal, and if you withdraw earnings before age 59-1/2, you can be exempt from the 10% penalty but not regular income tax (up to a combined maximum of $10,000 of conversions and earnings).
