72T and first time home buyer

L1: 72T and first time home buyerIs there an exception to the 72T rule for being a first time home buyer? If so, how does the IRS define a “First Time Home Buyer”2010-09-14 23:42, By: Ltfm161, IP: [67.77.163.158]
L2: 72T and first time home buyerYes, the early withdrawal penalty under Sec 72t is waived for distributions up to 10,000 lifetime for a first time homebuyer. This exception is claimed on Form 5329.
But this has nothing to do with a 72t plan for substantially equal periodic payments other than if you bust the plan for any reason, you could avoid the penalty on up to 10,000 for the year in which you incurred the first home expenses. You must have paid these expenses within 120 days from a distribution, so your 72t plan distribution pattern would come into play. If you are taking monthly distributions, you would probably be OK since you would likely have taken distributions within 120 days of paying these expenses.
Again, putting this in perspective, avoiding the penalty on only 10,000 of first home expenses is small comfort if you otherwise busted a plan involving several times that amount in distributions from the start of your 72t plan.
A “first time homebuyer” is defined on p 53 of Pub 590. Included in the requirements is a provision that neither you nor your spouse owned a main home for the 2 year period ending on the date you entered into a binding agreement to purchase the new property.
2010-09-15 00:40, By: Alan S., IP: [24.116.165.60]

L3: 72T and first time home buyerThere might be confusion in terminology concerningthe 2008 and 2009″first-time homebuyer” provisions with the exception to the 10% penalty provision allowed for a $ 10,000 lifetime distribution from an IRA for first-time home purchases ( no ownership in prior 2 years).
Believe it or not, IRS established TWO TYPES of First-Time Home Buyers, besides the Section 72-T variety.
Homes purchased in 2008 received a credit of 10% of the purchase price up to a limit of $ 7,500 which has to be repaid at $ 500/year for 15 years, unless the house is sold, in which case the entire unpaid ballance of the credit must be repaid as an additional tax on the tax return for that year.
Homes purchased in 2009 thru 4/30/10 ( with settlements extended from a 6/30 deadline to a 9/30 deadline) are eligible for a credit of 10% up to a limit of $ 8,000, but this credit does not have to be repaid, unless the taxpayer sells or otherwise stops using it as his principal residence within 36 months. If he does, the credit must be repaid in the year of sale, subject to a limit of the gain on the sale.
HOWEVER, there is ANOTHER CREDIT for “LONG-TIME RESIDENTS OF THE SAME PRINCIPAL RESIDENCE” who has maintained the same principal residence for ANY 5 CONSECUTIVE YEARS during the 8-year period ending on the date of purchase of the subsequent principal residence, being deemed to be a “first-time homebuyer” by the Congress/IRS twisted logic. This provision existed from 11/09/2009 thru 4/30/2010. It is not available on purchases after that date, unless resurrected by Congress in the forthcoming session.
So much for tax simplification, and convoluted terminology.
2010-09-15 01:40, By: dlzallestaxes, IP: [72.78.110.86]