Currently, the IRS allows

Currently, the IRS allows v five types of IRAs. The deductible, nondeductible, spousal, and Roth IRAs are primarily for retirement. ■ > The education IRA is for college expenses. The money in an IRA is yours and may be withdrawn at any time for any reason. However, if your withdrawal does not meet IRS rules for a “qualified withdrawal,” it could be subject to a 10% IRS penalty, plus ordinary income tax.

The Taxpayer Relief Act of 1997 added two kinds of IRA withdrawals that will not be subject to the 10% penalty tax: certain first-time home purchases and the payment of certain higher education expenses.

For a first-time home purchase, you can withdraw up to a total lifetime limit of $10,000 from a deductible, nondeductible, spousal, or Roth IRA. The money can be used to build, purchase, or rebuild a first home, which must be the principal residence of the IRA owner, spouse, child, grandchild, or parent. Generally, if you haven’t owned a home for two years, you qualify as a firsttime buyer. The IRS also requires that the home be purchased within 120 days of the IRA withdrawal.

Another important penalty-free withdrawal is for higher education expenses. Qualifying expenses from deductible, nondeductible, spousal, and Roth IRAs include tuition, fees, books, and supplies to attend college or other postsecondary educational institutions.

Qualifying expenses from I an education IRA include i these expenses plus room and board costs.

With planning, IRAs can be used to build tax-deferred

Katie Welch

celebrates 13th

I

Katie Welch celebrated her 13th birthday on Saturday with her parents, Bryant and Holly Welch, Emily Welch, and Rachel Berta. They saw the movie Titanic in Fairfax and had dinner at the Rain Forest Cafe at Tysons Comer. Rachel was an overnight guest in the Welch home.