How To Use An IRA Rollover To Purchase A House

If you want to purchase a house and have money in an IRA account, there may be a way to use this money for your down payment without paying taxes on it. The only guaranteed way to do this is if you can repay the money you withdraw within a certain amount of time. Here are three things to understand about this potential option.

Age Requirements

Withdrawing money from an IRA is something you can do tax-free if you meet the age requirements, which is normally the age of 59 1/2. If you are currently younger than the age requirements, you cannot withdraw money from your IRA without paying taxes. You may also incur penalties if you decide to withdraw money.

IRA accounts are designed for retirement savings, and this is why there are rules relating to withdrawals. There is a way to withdraw money before you reach the right age, though.

An IRA Rollover Might Work

If you are expecting a large inheritance or windfall of money within 60 days, you could easily use an IRA rollover to get the cash you need right now, without worrying about paying taxes and penalties on your withdrawal.

An IRA rollover is something you can use once a year to move money from one IRA account into another. When you do this, you have 60 days to make the transfer occur, which means you have 60 days to work with this money. As long as you redeposit the full amount you took from your IRA within this time period, you will not pay taxes on this money.

In a situation like this, an IRA rollover would work perfectly as long as you receive the windfall of cash in time to get it placed in another IRA account.

Tips To Make This Work

To make this idea work for you, there are two things you must do:

1. Verify the certainty of the windfall of cash – You must be certain that you will have this other cash in your hands before the 60-day period ends.
2. Choose a new IRA fund to use – The second thing to do is choose the IRA fund you will use as your new account. There are hundreds of options to choose from, and you should spend time finding the right option for you.

In addition, you may want to hire a financial adviser before you go through with this. A financial adviser can make sure that you handle this transaction legally and properly.