New Bill Lets First-Time Homebuyers Take More From IRAs

News October 18, 2024 at 11:49 AM

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New legislation would increase the amount individuals may withdraw from an IRA to purchase their first home from $10,000 to $25,000.

The bill, the First Time Homeowner Savings Plan Act, was introduced Tuesday by Rep. Haley Stevens, D-Mich., and amends the Internal Revenue Code to increase the maximum amount that may be withdrawn, without penalty, from a qualified retirement plan for the purpose of assisting a first-time homebuyer in purchasing a principal residence.

The increased distribution amount is adjusted annually for inflation for taxable years beginning after 2025, according to the bill's text.

"Buying a home not only provides families a place to live but is key to building wealth," Stevens said in a statement.

"By increasing the amount first time buyers may withdraw from their IRA savings to purchase a home, this bill will encourage young Americans to start saving earlier, help millions of Americans purchase their first homes, and allow the next generation to build wealth through homeownership," Stevens said.

The bill is endorsed by the American Bankers Association, the Mortgage Bankers Association and the National Association of Realtors.

When the provision was enacted in the early 1990s, "$10,000 went a lot further than it does today," added NAR President Kevin Sears in the statement. Increasing the amount to $25,000 "is a much needed and very helpful step to assist families with the increasingly elusive but often vital goal of purchasing their first home.

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