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Can I use payoff of my 1st home for reason on drawing from my IRA retirement? I received a 1099-r

I was hoping I could avoid the penalty on the $20,000 that was drawn out of my IRA account last year. I used that money to pay off my house (first home).  Was hoping to use the "purchase first home" reason.

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Employee Tax Expert

Can I use payoff of my 1st home for reason on drawing from my IRA retirement? I received a 1099-r

No, you cannot use payoff as  "purchase first home" exception to the additional 10% tax penalty. A payoff is not the same as purchase.  Per IRS, you have to close on home within 120 days of taking money out of IRA to qualify for this exception.  

1 Reply
Employee Tax Expert

Can I use payoff of my 1st home for reason on drawing from my IRA retirement? I received a 1099-r

No, you cannot use payoff as  "purchase first home" exception to the additional 10% tax penalty. A payoff is not the same as purchase.  Per IRS, you have to close on home within 120 days of taking money out of IRA to qualify for this exception.