The ERISA consultants at the Learning Center Resource Desk, which is available through Columbia Threadneedle Investments, regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with an advisor in Maryland is representative of a common inquiry related to distributions from IRAs and qualified retirement plans for home repairs. The advisor asked:
“I have a client whose home was damaged by a tornado, and he wants to know whether he can take money from his IRA or 401(k) plan to pay for home repairs. Can you explain his options?”
Highlights of Discussion
The following table compares distributions taken from IRAs and qualified retirement plans specifically for home repairs:
Conclusion
Some individuals whose homes are in need of repair may be tempted to use some of their retirement savings to cover the expense. If there are no other options for them, an IRA or qualified retirement plan withdrawal may be possible, but they need to be aware of the specific rules that apply to IRA withdrawals vs. qualified retirement plan withdrawals taken for home repairs, and the taxes and penalties that may apply.
The Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC (RLC), a third-party industry consultant that is not affiliated with Columbia Threadneedle. Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Columbia Threadneedle does not provide tax or legal advice. Consumers consult with their tax advisor or attorney regarding their specific situation.
Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Columbia Threadneedle.
Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies.
© 2015 Columbia Management Investment Advisers, LLC. Used with permission.
