withdrawing from a roth ira for a downpayment of 3%-i'm a 1st time buyer

[dnoss123]

I have put $25,000 in a ROTH IRA  2 years ago, I'm a 1st time buyer, my intent is take 5%

of the balance for a home purchase, my admin person at USAA says i should be charged

a tax penalty but recommended that i get an opinion from a tax expert,

what if any tax penalty would there be?

thank you for the help.

Debra Noss

[email address removed]

[macuser_22]

How did you "put" $25,000 into a Roth 2 years ago since the maximum Roth contribution per year was $5,500 ($6,500 of over age 50)?     Was it a rollover or conversion?

Assuming that the $25,000 was your own after-tax contributions:

There is a 5 year Roth rule that says that any earnings withdrew are subject to a 10% early distribution penalty unless you have owned ANY Roth IRA account for at least 5 years - the first home exception does not overreact the 5 year rule.

However, you can ALWAYS withdraw any of your own prior contributions at any time without any tax or penalty since Roth contributions are after-tax money to start with.   If the $25,000 are your previous contributions and not earnings, then that that can be withdrawn at any time, for any purpose, with no tax consequences at all.

[dnoss123]

the money was from a divorce settlement, I haven't made any contributions to it,

does that effect my withdraw options,making it a taxable withdrawal, or does the 1st time

buyer rule come into play?

[macuser_22]

I will ask someone else to offer an opinion.

@dmertz - can you help here?

Money from a divorce settlement ending up in a Roth IRA sounds like an excess contribution to me...   Perhaps an employer plan and QDRO would allow it....   Any ideas?

[dmertz]

Did the money now in your Roth IRA come from your ex-spouse's Roth IRA, from a designated Roth account in a qualified retirement plan like a 401(k), from a traditional account in a qualified retirement plan, or was the money paid to you personally and you later used the money to make a deposit into the Roth IRA (which one)?

If the money came from your ex-spouse's Roth IRA, was the money moved to your Roth IRA by nonreportable trustee-to-trustee transfer?

Assuming that the money came from a retirement account of your ex-spouse, was the money deposited into any account other than the Roth IRA between the time the money left your ex-spouse's retirement account and the time it was deposited into the Roth IRA?