Living with children

Short questions

I’ve been asked of late (mostly by journalists) and proportionately short answers: withdrawal? - Spencer

Hey Spencer - How mad will you be if I say it’s both hard and easy? In theory, as long as you meet the requirements, you’ll get a check for the requested amount and the IRS will leave you and your money alone There are a few details, however, that make it all a little trickier than that

1 The limit is $10,000 If you had been thinking you could buy an entire house using what’s in your IRA, I’m sorry to be the bearer of bad news. The amount you can withdraw caps at $10,000, meaning you really should only use these funds as a sweetener for your mortgage terms If you’re in a position where you really need that $10,000 to make buying a house feasible, I wonder how long it will take you to recoup the losses from your retirement fund While a house should go up in value, it’s mostly just a money drain while it’s your primary residence Make sure you put a lot of thought into where that $10K actually has the most value

2 You have to spend it within 120 days Buying a house, especially when it’s your first, can take a lot longer than expected 120 days might feel like a lot of time, but it’s gone in the blink of an eye when real estate is involved, and it’s gone even faster if something falls through and you have to start over If something goes wrong and you don’t have proof of purchase within the allotted time, you run the risk of IRS backlash and a potential penalty Imagine paying the penalty on an IRA withdrawal that you

3 Are you sure? Retirem money is not something messed with If you don when you need it, there’ fix One of the biggest p with using your IRA sav mental acknowledgment that the money can be used There will always be bills to pay and things to buy, and the only thing keeping you from putting retirement funds toward other needs is understanding that you have to save that money for later If you start bending the rules, even with the best intentions, you could head down a path that puts you in a tough spot later on

The IRS allows for a few exceptions as a means of helping people in dire situations If you head to GoFarWithKovarcom, you can see a piece I wrote about most of the other penalty-free options As you think about what to do, remember that the rules exist to help you out when you are in a bind, so just be careful not to take action unless it's truly necessary Good luck, Spencer!

Taylor Kovar, CEO of Kovar Capital Read more about Taylor at GoFarWithKovar com

Disclaimer: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies

Investments involve risk and, unless otherwise stated, are not guaranteed Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar com, or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901