First Time Home Distribution????

[Guest spolleypt]

I am planning on purchasing a home this coming month and would like to use my Roth IRA to assist with the downpayment. I have 10% to put down, the roth would be an additional 10% (10,000) to equal 20%.

I opened my Roth in Jan of 99, but made contributions for tax year 98, 99, 00, 01 and partially for 02. My estimate is that my 5 years is up at the end of 2002, correct me if I'm wrong please!

Question #1:

If my above estimate is right, I'd like to take a primary mortgage for 80% the value of the home, a secondary mortgage for 10% (which will be paid in Jan. 2003 when I can take money from my roth ) and put 10K down. Will I be able to withdraw from my roth 8 months after the purchase is complete and use that money to pay off my second mortgage?

Question #2

If I cannot use my Roth in 8 months to pay the second mortgage (which is really the additional 10% down) can I access my roth now if I complete my 2002 contributions?

Any other advice to make this work would help.

Thank You

P.S. After posting this I think I answered my own question. Correct me if I'm wrong. As long as I take distributions from my contributions there is no five year holding rule, and it can be done at any time. If I take from earnings, then the five year rule would apply.

[Appleby]

Your conclusion is right.

Note that there is also a five-year period for amounts credited to the Roth IRA as conversion amounts. These amounts , if taxable at the time of conversion, would be subjected a a10 percent premature penalty if withdrawn before five years after the conversion, unless an exception applies.

The first time homebuyer is an exception.