Roth IRA / First Time Home Buyer

[mikeyb123]

Hi,

My wife and I are first time home buyers and we took out money (contributions & some earnings) from our Roth IRAs for a down payment shortly before we were scheduled to close escrow.

There were some probate issues with the title that we have been waiting on. Escrow was scheduled to close Aug 8th, but we have just been extending the contract until the seller has a clear title. The title company still has our good faith deposit.

My question is on the Roth 120 day timeframe. Do we need to get our earnings back into our Roth IRAs, or should we keep it out since we are still under contract?

Thanks!

[macuser_22]

If it does not look like it will close withing the 120 day window then you have the option to roll the money back to the IRA.   As you note, only the earnings are subject to the early distribution penalty  so only the earnings need to be rolled back.    Once back in the IRA, you can take another distribution with a new 120 day clock.