What is the name of your state? PA
Nephew is looking to take an early distribution from his rollover IRA to buy a house. It has been well over two years since he sold his last house so he qualifies as a first time home buyer. As I understand it, Pub 590 says early distribution must be used before the close of the 120th day after you receive the funds. Pub 590 does not stipulate whether or not new home must be under contract at time early distribution is received.
Questions:
Can nephew first enter into a contract to buy a new home and then take an early distribution from his rollover IRA which can be used to pay for acquisition costs at settlement, providing settlement occurs within the 120 day timeframe?
Can nephew use the early distribution to pay for the money he put down to bind the contract prior to receiving the early distribution? This seems like it should be ok since the binding downpayment check really isn't cashed until closing.
Nephew is looking to take an early distribution from his rollover IRA to buy a house. It has been well over two years since he sold his last house so he qualifies as a first time home buyer. As I understand it, Pub 590 says early distribution must be used before the close of the 120th day after you receive the funds. Pub 590 does not stipulate whether or not new home must be under contract at time early distribution is received.
Questions:
Can nephew first enter into a contract to buy a new home and then take an early distribution from his rollover IRA which can be used to pay for acquisition costs at settlement, providing settlement occurs within the 120 day timeframe?
Can nephew use the early distribution to pay for the money he put down to bind the contract prior to receiving the early distribution? This seems like it should be ok since the binding downpayment check really isn't cashed until closing.