Joseph Jones - Page 7

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          First Home Purchase Exception                                               
               Section 72(t)(2)(F) provides, in relevant part, an exception           
          to the 10-percent additional tax for “Distributions to an                   
          individual from an individual retirement plan which are qualified           
          first-time homebuyer distributions”.  (Emphasis added.)  A                  
          “qualified first-time homebuyer distribution” is “any payment or            
          distribution received by an individual to the extent such payment           
          or distribution is used by the individual * * * to pay qualified            
          acquisition costs with respect to a principal residence of a                
          first-time homebuyer who is such individual”.  Sec. 72(t)(8)(A).            
          A “first-time homebuyer”, in relevant part, “means any individual           
          if such individual (and if married, such individual’s spouse) had           
          no present ownership interest in a principal residence during the           
          2-year period ending on the date of acquisition of the principal            
          residence”.  Sec. 72(t)(8)(D)(i)(I).  The date of acquisition, as           
          relevant herein, is the date on which construction of a principal           
          residence is commenced.  Sec. 72(t)(8)(D)(iii)(II).                         
               Section 7701(a)(37) defines individual retirement plan for             
          purposes of the Internal Revenue Code as an individual retirement           
          account described in section 408(a) and an individual retirement            
          annuity described in section 408(b).  Retirement plans qualified            
          under section 401(a) and 401(k) are not included in the                     
          definition of “individual retirement plan” under section                    
          7701(a)(37).  Therefore, because section 72(t)(2)(F) applies only           






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Last modified: May 25, 2011