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Tax implications of gifting grown child money from retirement account to buy home
Asking for someone who was asking me about this the other day. They are in their early 60s, retired and thinking to pull some of their money from their retirement accounts to buy their son a home or at minimum give him a downpayment. What are the tax or gifting implications exactly?
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Money withdrawn from your retirement account, regardless of what you do with it, has tax consequences if it's a traditional IRA. The exception is if it's a Roth IRA in which case withdrawals are tax free. They won't pay any estate taxes and will simply have to file a gift tax return to basically document to the IRS exactly how much they gifted. That's required because you can gift up to $11.7 million in your lifetime without estate tax implications.
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@Clara373 What's nice to know too is that if you're still in your 50s and need money from your ROTH IRA you can take it out tax-free up to the amount you contributed into the account without incurring the 10% early withdrawal penalty. I learned this only recently and passing it along :>)
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@Rina327 @Clara373 Thanx a lot!
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