Would you take $5000 out of Roth IRA at age 28 for real estate? (IRAs, rollover)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm in a bind. I got $10000 in my Roth IRA since I started contributions at age 26. I have a chance to buy 20+ acres out in the country in a very good land market. My parents are looking to buy the 20+ acres but I will put down the down payment and then we'll split the parcel in half. This will eventually be where I'd like to build my home in the next 5 years. I'd like to take $5000 from my ROTH and use it as part of the down payment. I know that once I take it out, I can't put it back in.
I'm going to be 29 soon. Is this OK or should I keep the $5k in the ROTH? We're hoping to buy the land in the next month or two.
Nick, if you take $5,000 out of your Roth, you won't have $5,000. You will need to take about $7,000 to $9,000 out of your Roth in order to get $5,000.
So you will have $5,000 in the land
$1,000 - $2,000 left in your Roth
and $1,000-$2,000 completely wasted
Why don't you have $5,000 in cash or in a savings account that is liquid?
Nick, if you take $5,000 out of your Roth, you won't have $5,000. You will need to take about $7,000 to $9,000 out of your Roth in order to get $5,000.
So you will have $5,000 in the land
$1,000 - $2,000 left in your Roth
and $1,000-$2,000 completely wasted
Why don't you have $5,000 in cash or in a savings account that is liquid?
Can you explain why I need to take out 7000-9000 out of the Roth in order to get 5000? I think I understand what you're saying, just want to make sure.
I do have liquid, but it's part of the downpayment, as well. Plus I am using it for other things.
Personally, unless it is for an emergency(medical, facing foreclosure, etc.), i wouldn't take anything out of my Roth due to taxes and the fact you started it for the sole purpose of retirement. Can't you borrow some from other relatives? Also, if this land is such a great deal, prioritize some of your liquid cash for it.
Can you explain why I need to take out 7000-9000 out of the Roth in order to get 5000? I think I understand what you're saying, just want to make sure.
I do have liquid, but it's part of the downpayment, as well. Plus I am using it for other things.
Can you explain why I need to take out 7000-9000 out of the Roth in order to get 5000? I think I understand what you're saying, just want to make sure.
I do have liquid, but it's part of the downpayment, as well. Plus I am using it for other things.
Penalty tax, income tax, tax on taxes, and more taxes.
I would say you are over contributing to your IRA if you don't even have $5,000 in savings that you can use.
What if you lost your job or something? You'd have to go into your IRA for that too?
I'm in a bind. I got $10000 in my Roth IRA since I started contributions at age 26. I have a chance to buy 20+ acres out in the country in a very good land market. My parents are looking to buy the 20+ acres but I will put down the down payment and then we'll split the parcel in half. This will eventually be where I'd like to build my home in the next 5 years. I'd like to take $5000 from my ROTH and use it as part of the down payment. I know that once I take it out, I can't put it back in.
I'm going to be 29 soon. Is this OK or should I keep the $5k in the ROTH? We're hoping to buy the land in the next month or two.
Thanks for any advice.
Seems pretty speculative. Seems to take a large portion of your assets (half at least) in order to get yourself into what will probably be significant debt buying land that, unless I am missing something, will produce no revenue to pay for itself.
There is such as thing as simply not having the cash on hand to take advantage of opportunities. It'd be one thing if this were $10000 in bank savings (leaving your IRA, whatever was in it, alone) and you wanted to deploy some of it in order to do this. That's why we save money in banks--either to keep us from going into debt in emergencies, or to have the means to jump on opportunities.
Penalty tax, income tax, tax on taxes, and more taxes.
I would say you are over contributing to your IRA if you don't even have $5,000 in savings that you can use.
What if you lost your job or something? You'd have to go into your IRA for that too?
At this point, I'm just confused. I mentioned before that with ROTH IRAs, you can withdraw from it at anytime, for any reason, without incurring any tax or penalty (according to IRS publication 590):
[You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s).]
The rules for Roth IRAs permit you to do something that isn’t allowed for regular IRAs: withdraw the nontaxable part of your money first. Distributions from regular IRAs come partly from earnings and partly from contributions. But when you take money out of a Roth IRA, the first dollars you take out are considered to be a return of your non-rollover contributions. You don’t have to meet any special tests to receive those dollars free of tax. You can take them out any time, for any reason, without paying tax or penalties.
Btw it's now 2k, not 5k I want to take out. Thoughts?
Penalty tax, income tax, tax on taxes, and more taxes.
I would say you are over contributing to your IRA if you don't even have $5,000 in savings that you can use.
What if you lost your job or something? You'd have to go into your IRA for that too?
You realize that ROTH IRA's are post tax and any contributions you make to them can be taken out penalty free at any time? No need to pay additional taxes because they are already paid and no penalties are paid as long as you take out the same amount or less $$ you put in.
Nick I'd do it.
To say he is over contributing I disagree. I think it's smart to put your $$ in the ROTH IRA because of the maximum limits and yearly quota. In fact I did the exact same thing, threw all my $$ in it before I had savings and let it sit there.
That's right, contributions come out first, no tax or penalty on those.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
