If you need cash quickly, you may be considering a withdrawal from your traditional IRA. However, if you’re under age 59½, the IRS defines that as an “early withdrawal,” which is generally subject to a 10% penalty tax. Several exceptions exist. One exception allows you to take a penalty-free withdrawal for the purchase of an eligible “first-time” principal residence for you, your spouse, or certain relatives. The withdrawal is subject to a lifetime $10,000 limit and must be spent within 120 days to pay for the qualified acquisition costs of the home. You (and your spouse, if applicable) must not have owned a principal residence within the two-year period that ends on the acquisition date.
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