Liquidating ira for home purchase
Now that you know you can withdraw funds from your Roth IRA for a home purchase, the next question is should you?Unless you specifically opened up the Roth IRA to set money aside for your home purchase, you might want to consider other funding options.Next, let's look at some other ways in which cashing out your IRA can help you buy a home.My wife and I recently left Brooklyn for the suburbs, the latest in a long string of emigrants leaving New York City for Long Island.Wiping out your initial investments today will set back your retirement savings by many years.
You just have to have not owned a home during the two-year period before you’re buying this new home. One of the major perks of using a Roth IRA is that you’ve already paid income tax on your contributions.
You can withdraw all of your contributions at any time without penalty or tax.
(Your earnings have to stay in the Roth IRA.) So if you have socked away a lot of money over the past several years into a Roth you could pull those funds out to aid in your home purchase.
There is less time for compound interest to work in your favor, and your nest egg ends up being smaller in retirement.
If you are having to tap an IRA to fund your home purchase because you have no other options, you need to reconsider.