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Does a withdrawal of $10000 for 1st home purchase count against Roth IRA basis? I need to know to see how much I can take out after this $10,000 qualified withdrawal (assuming having been in the Roth IRA for more than 5 years and I'm younger than 59 1/2 years old).

In other words, let's say I have $30,000 in contributions to Roth IRA and then my account grew by $20,000 (Roth IRA stock investments) so I now have $50,000. I need some money and need to tap into my Roth IRA so I want to know how much I still can take out tax and penalty free.

Is my basis still $30,000 after $10000 for house or do I only have $20000 left for basis? I'm thinking I should still have $30000 left for basis since the $10000 house was qualified and a special case. Please let me know.

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TL;DR: No, it doesn't count against the Roth IRA basis.

You can find out by looking at Form 8606 Part III, which is the part for distributions from Roth IRA.

Line 19 is the sum of nonqualified distributions, plus qualified first-time homebuyer distributions. You would put $10000 here. Then you would subtract $10000 on line 20 (qualified first-time homebuyer expenses) to get $0 on line 21. You enter your basis on line 22, but since line 21 was 0, you stop. You do not subtract anything from your basis. If you take out more than $10000, then it's only the part over $10000 that is subtracted from your basis.

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From Schwab

With a Roth, withdrawals of contributions are always tax-free because you've already paid income taxes on that money. So are withdrawals of earnings of up to $10,000 under the homebuyer exemption, assuming you've had the Roth for five-plus years. But if you withdraw more than $10,000 in earnings, that money will be subject to both ordinary income taxes and the 10 percent penalty.

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  • This doesn't really answer the OP's question about whether or not he can withdraw earnings under the homebuyers exception without lowering his contribution basis.
    – Ben Miller
    Apr 18, 2017 at 11:29
  • "So are withdrawals of earnings of up to $10,000 under the homebuyer exemption" - The withdrawal will apply to earnings first. Basis is reduced only if earnings are less than $10K.
    – JTP - Apologise to Monica ♦
    Apr 18, 2017 at 12:16

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