Purchasing REO’s with Retirement Funds
A bill was introduced in the U.S. House of Representatives that would waive withdrawal penalties on certain retirement plans if the money is used to buy a home that has been in foreclosure for a year or more. This bill was introduced recently by congressman and real estate professional Bill Posey, R-Fla, and is expected to apply to Roth IRAs, 401(k) plans, and company pensions.
The intent is to promote purchases of these types of properties by owner occupants or second homes rather than people looking to “flip” them. According to the bill, purchasers must agree to hold the property for at least two years to avoid penalties associated with the withdrawals.
The “second home” idea could be an inviting one as California (25%)and Florida (9%) accounted for nearly 34% of foreclosure activity during the first quarter according to RealyTrac.
The bill has been sent to committee for further consideration.
