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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Fraxinus on December 15, 2018, 04:33:56 PM

Title: Before retirement Roth IRA withdrawal help
Post by: Fraxinus on December 15, 2018, 04:33:56 PM
Hi all,

I've tried googling this issue, and calling Fidelity, but I'm still unsure one where I stand, & would appreciate your advice.

Background: I'm currently age 30, in the U.S., & since 26 I've been maxing out employer match 401(k) as well as independent Roth IRA contributions. I've wanted to maximize what I have in retirement for the sake of compound interest, and have kept a pretty skimpy personal savings account (roughly $10k). This past year, unforeseen circumstances (wife got a new job & new commute) instigated us to purchase a house. I had already invested in my Roth for the year. In order to make down payment, pay closing fees, & have a few dollars to put into the new house, I needed to pull out most of this year's investment in the Roth. I know this is bad. And dumb. And exactly what I shouldn't have done. BUT, beforehand, I did some internet research & talked to a rep at Fidelity, and even though I've owned the Roth less than 5 years, I was told that becausethe withdrawal was for a first-time home purchase within the current year I wouldn't be charged a tax penalty for the withdrawal.

This is where it gets murky, from my perspective: that initial home purchase (back in July) fell through after the inspection. I've been looking like crazy, but only found a home that fit our criteria in mid November. The seller countered my initial offer, and made it a non-negotiable item that closing not be until January 11th. We want the house, and so agreed to the seller's counter.

Long story short... I've made a withdrawal on a Roth IRA that I've owned for less than 5 years. And I didn't purchase a first-time home within that calender year. Am I going to be buggered on an early withdrawal tax penalty? If so, is there anything I can do to avoid it (IRS form to fill out)? I've tried Fidelity again, and the rep I talked to said I needed to talk to a tax professional to figure out where I stand. If MMM has the same recommendation, that's what I'll do. BUT... I'm cheap. So I thought I'd post here to ask MMM advice before going that route.

Any advice is greatly appreciated!
Title: Re: Before retirement Roth IRA withdrawal help
Post by: Fraxinus on December 15, 2018, 04:35:02 PM
Double tap. Mods please delete.