- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Retirement tax questions
You will not have met the 5 year rule until 2019. You can withdraw your original Roth contributions, if any, in 2018 without tax or penalty. If used for a first-home purchase in 2018, the amount distributed that is attributable to the taxable portion of the conversion from the 401(k) will not be subject to tax but you'll need to apply the first-home purchase exception (on a maximum of $10,000 lifetime) to avoid the early distribution penalty on this portion. Any distributed earnings will be taxable but will also not subject to an early-distribution penalty with the application of the first-home penalty exception since there is no need to meet the 5-year rule to avoid the penalty, only to make the earnings nontaxable. To qualify for the penalty exception, any distributed earnings must be used for the acquisition of the first home within 120 days of the distribution.