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Can I close out my traditional and Roth IRA accounts to use for down payment?

I have a traditional IRA and a Roth IRA with relatively low balances that I would like to withdraw money from to use for a down payment on my first house. I know that it's a qualified withdrawal so no penalty, but is there a penalty if I close them out completely and leave zero balances? The funds are from previous employers and have just been sitting idle (or declining and rebounding in the economy, I guess) and I have a newer, higher balance Roth that I currently contribute to. Is it ok to just close the old ones out??

1 Answer

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  • ?
    Lv 7
    1 decade ago

    Sure but you pay the 10% penalty and the 20% federal tax for the traditional Ira, You will owe the state taxes also.

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