Homebuyers under age 59.5 may withdraw up to $10K from IRA without the 10% penalty if the funds are used for what purpose?

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Multiple Choice

Homebuyers under age 59.5 may withdraw up to $10K from IRA without the 10% penalty if the funds are used for what purpose?

Explanation:
There is a special penalty exemption for IRA withdrawals used to buy a first home. If you’re under 59.5, you can withdraw up to $10,000 without paying the 10% early-withdrawal penalty, and that money must be used for qualified costs to acquire a principal residence—the purchase, construction, or rebuilding of a first home. This specific purpose is what makes the option correct. Other uses like paying tuition, paying off debt, or investing in a business don’t qualify for this penalty waiver. Taxes on the distribution may still apply depending on the IRA type.

There is a special penalty exemption for IRA withdrawals used to buy a first home. If you’re under 59.5, you can withdraw up to $10,000 without paying the 10% early-withdrawal penalty, and that money must be used for qualified costs to acquire a principal residence—the purchase, construction, or rebuilding of a first home. This specific purpose is what makes the option correct. Other uses like paying tuition, paying off debt, or investing in a business don’t qualify for this penalty waiver. Taxes on the distribution may still apply depending on the IRA type.

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