On Apr 19, 6:15*am, johntalmadge.wri...[at]gmail.com wrote:
- quote -

ARE you receiving a distribution from a 401k that is eligible to roll
over into an IRA??? What is going to be your distribution request from
your employer. Hardship? Retirement? Severance from employement?

I think you skimmed over that "IF" to quickly.

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Assume you can rollover money from the 403(b) to a
Traditional IRA. (That's a big assumption, but let's just
assume for now you can.) Then you do get to withdraw $10k
from the IRA penalty free. But fact is, $10k is not a lot of
money when it comes to a home purchase these days. Have you
run the numbers for foregoing cashing in part of your
retirement plan and instead saving the money for the
downpayment? Or perhaps just financing the $10k through the
lender and suffering the PMI for awhile?

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johntalmadge.wright[at]gmail.com wrote:
- quote -

Beware of getting tax advice from your H.R. department.

What is all-important is the distribution code on the 1099-R you (and
the IRS) will receive. If it is code "1", and the IRA box is not
checked, you will pay an early-distribution penalty (10% federal plus
possibly some amount for state) in addition to regular tax.

In other words, to answer your question about "front-loaded", no, you
are not right. If you don't elect appropriate withholding, and don't
make estimated tax payments or increase other types of withholding, you
will most likely have an underpayment penalty on your tax return(s) in
addition to the early-distribution penalty.

-Mark Bole

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On Apr 18, 9:55*am, johntalmadge.wri...[at]gmail.com wrote:
- quote -


Have you considered getting a loan from your 403B?

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On Apr 18, 3:56*pm, Dave Dodson <dave_and_da...[at]juno.com> wrote:
- quote -

Thanks, Dave. That answers my question. I appreciate your researching
for me.

John

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On Apr 18, 11:55*am, johntalmadge.wri...[at]gmail.com wrote:
- quote -

Many 403b plans allow a distribution for the first time purchase of a
home. Start by asking the plan administrator, hopefully they are well
versed in their plans distribution rules (hardship and otherwise). If
they are an "empty uniform", consult your summary plan document. The
rules are generally the same as those of a 401k.

There is likely no need to employ an IRA, which is good because you
probably can't. Typically, qualified plans do not allow for in-service
withdrawals while employed. Loans and hardship distributions are
standard but not required.

As for taxation: Any distribution will be subject to ordinary income
tax. The "$10k house rule" only gets you out of paying the 10% early
withdrawal penalty. The 10% penalty is not "front-loaded and adjusted
at tax time". However, the IRS mandates that 20% be withheld from non-
qualified distributions. I do not THINK this can be avoided even for
home purchases. Check with your plan admin.

The time it takes is totally dependent on your 403b plan provider.
Customarily, you must submit a distribution request to the plan admin.
The admin then confirms that the paperwork is in good order and you
are eligible for the request being made. They then notify the plan
provider (like John Hancock or Fidelity) who issues a check for the
funds. 5-10 business days is normal.

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On Apr 18, 11:55*am, johntalmadge.wri...[at]gmail.com wrote:
- quote -

I found this FAQ and answer on the irs.gov web site:
---
If I can't withdraw funds penalty free from my 401(k) plan to purchase
my first home, can I roll it over into an IRA and then withdraw that
money to use as my down payment?

Yes, if you are receiving a distribution from a 401(k) that is
eligible to roll over into a IRA and you meet all of the
qualifications for an IRA distribution for a first-time homebuyer.
Your plan administrator is required to notify you before making a
distribution from your 401(k) plan whether that distribution is
eligible to be rolled over into an IRA. To see if you qualify for a
distribution to be used as a first-time homebuyer, refer to Chapter 1
of Publication 590, Individual Retirement Arrangements (IRAs).
---

It seems that the key question is whether your employer will allow you
to do an IRA rollover while still employed. I think the only way to
find that out is to ask your 403(b) administrator.

IRS Publication 590 says:
---
First home. Even if you are under age 59½, you do not have to pay
the 10% additional tax on up to $10,000 of distributions you receive
to buy, build, or rebuild a first home.
---
It goes on to list a number of requirements that you must meet. I
think this allows you to avoid the penalty, but not the taxes on an
IRA distribution of $10,000. Thus, after you pay income tax at your
marginal federal + state rate, you still might have a few thousand
dollars left for your house.

If you are allowed to do the rollover, no tax should be withheld at
that time, and if you then take the distribution, the IRA custodian
will ask you whether or not you want taxes to be withheld, and you can
tell them "No."

Dave

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My wife and I are looking to buy a house; we are hoping to drawdown on
my retirement savings, as first-time buyers, for the down payment.
Here’s the catch: I know we can draw down an IRA penalty-free for a
home purchase, but my investments are in a 403b. Is it legally
possible for me to rollover my funds into a Traditional IRA, expressly
for the purpose of drawing those funds down penalty-free? Also, I
assume the disbursement is taxed at filing time, not front-loaded
(netting down the disbursement) and adjusted at tax time. Am I right?
Finally, how quickly can this process take place?

Thank you all for your responses.

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