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I withdrew from my ira to put a new roof on my house. Is this withdrawal exempt from the extra 10% early withdrawal tax?

I am 55 years old.  Would the answer be different if I had withdrawn it from a 401k?

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Level 12

I withdrew from my ira to put a new roof on my house. Is this withdrawal exempt from the extra 10% early withdrawal tax?

Unfortunately, no, it is not exempt for the 10% early withdrawal penalty.  A new roof does not qualify for an exemption to the 10% penalty.  And no, the answer is not different for a 401k; it wouldn't qualify for an exemption for a 401K either.  

See page 4 https://www.irs.gov/pub/irs-pdf/i5329.pdf

 

**There is an exception to this rule, but only in federally declared disaster areas.  Congress enacted special tax relief to make it easier for retirement plan participants (including IRA owners) to access their retirement funds to recover from disaster losses incurred while living in certain federally declared disaster areas in 2016 and 2017. This disaster relief may allow affected participants to:

 

  • avoid the 10-percent additional tax on early distributions,
  • include qualified disaster distributions in income over three years,
  • repay distributions within three years,
  • borrow more funds as a plan loan, and
  • repay plan loans over a longer period.

View solution in original post

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Highlighted
Level 12

I withdrew from my ira to put a new roof on my house. Is this withdrawal exempt from the extra 10% early withdrawal tax?

Unfortunately, no, it is not exempt for the 10% early withdrawal penalty.  A new roof does not qualify for an exemption to the 10% penalty.  And no, the answer is not different for a 401k; it wouldn't qualify for an exemption for a 401K either.  

See page 4 https://www.irs.gov/pub/irs-pdf/i5329.pdf

 

**There is an exception to this rule, but only in federally declared disaster areas.  Congress enacted special tax relief to make it easier for retirement plan participants (including IRA owners) to access their retirement funds to recover from disaster losses incurred while living in certain federally declared disaster areas in 2016 and 2017. This disaster relief may allow affected participants to:

 

  • avoid the 10-percent additional tax on early distributions,
  • include qualified disaster distributions in income over three years,
  • repay distributions within three years,
  • borrow more funds as a plan loan, and
  • repay plan loans over a longer period.

View solution in original post