Here is my situation.

I have a Roth IRA account that was opened 4 years ago. I am buying my first house and want to use all of my Roth IRA money for part of a downpayment. I have not made any contributions to the account over the past 3 years, and do not plan to in the future. Therefore, if I take the money out of the Roth, can I subsequently close the account and not pay the money back? Is it treated like a loan in that regard or can I just keep the money and not worry about paying it back?

Thanks for the help!!

You dont pay the money back since any withdrawal is a distribution. If the Roth has been in existence less than 5 years then all earnings are taxed and subject to penalty tax. Contributions are returned income and penalty tax free (with exception of a conversion from a regular IRA that you didnt pay the penalty tax on and you didnt survive the 5 year period). If you have held 5 years then all distributions are income and penalty tax free if qualified under the first time home buyer exception.

Actually, the earnings would have an exception to the 10% penalty because it is a first time home owner, up to $10,000. It would all be taxable however.

Before suggesting the earnings are taxable, one has to confirm what the poster means by "four years ago". If the IRA was opened in April, 1999, with a contribution that was attributable to 1998, then the account qualifies as over five years old and the earnings would NOT be taxable.

The key question is whether there was a 1998 contribution.

Good point.