dmertz
Level 15

Retirement tax questions

Yes, you'll still get the tax deduction for the $6,000 contribution and the contribution must be reported, but you'll also own taxes on the $6,000 distribution.  The first-time homebuyer's exception only exempts you from the 10% early-distribution penalty on up to $10,000 (lifetime) that would otherwise be due on money distributed from your traditional IRAs prior to age 59½, not from income taxes on the distribution.  The result will be essentially the same as if you had not made the $6,000 contribution except that you've unnecessarily used up $6,000 of your lifetime $10,000 limit on using the first-time homebuyer exception.  It generally makes no sense to make a contribution to a traditional IRA when you have the expectation of taking the money back out relatively soon thereafter.