Question
A first-time homebuyer may make a penalty-free withdrawal from an IRA of up to A) \( \$ 15,000 \) B) \( \$ 10,000 \) C) \( \$ 25,000 \) D) \( \$ 30,000 \)
Ask by Long Curry. in the United States
Jan 27,2025
Real Tutor Solution
Tutor-Verified Answer
Answer
The correct amount a first-time homebuyer can withdraw penalty-free from an IRA is **$10,000**.
Solution
For first-time homebuyers, the IRS allows a penalty-free withdrawal from an Individual Retirement Account (IRA) to help cover the costs associated with purchasing a home. Specifically, you can withdraw up to **$10,000** without incurring the typical 10% early withdrawal penalty. This provision is available for both traditional and Roth IRAs, provided you meet the definition of a first-time homebuyer according to IRS guidelines.
**Correct Answer:**
**B) $10,000**
Reviewed and approved by the UpStudy tutoring team
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Simplify this solution The Deep Dive
If you're a first-time homebuyer, you can make a penalty-free withdrawal of up to \( \$ 10,000 \) from your IRA to help with your home purchase. This is a great way to access some funds without incurring additional fees, making your dream of homeownership a little more attainable! Remember, this \( \$ 10,000 \) limit applies to individual accounts, so if you're married and both you and your spouse are first-time homebuyers, you can each withdraw \( \$ 10,000 \) from your respective IRAs, giving you a total of \( \$ 20,000 \) towards your home purchase! Just make sure to keep all documentation related to the home purchase to ensure a smooth process.
