IRA Withdrawal - Was there a better way?

[Darius Jessup]

I feel in my gut I could have gone about this a better way and could use some input.
I recently pulled out all of my money from my traditional IRA to put towards a down payment for a duplex my wife and I are buying in DC in 2 weeks

Needless to say, it is now considered taxable income with the likelihood of incurring the 10% early withdrawal penalty. Could I have had that IRA converted to a self directed IRA and avoided that? Was there a better way I could have considered??

[Pauline Zhao]

@Darius Jessup

I agree with Carl. Early withdrawal from traditional IRA will cause 10% penalty and taxable income. However, if the withdraw is for a reasonable cause, such as purchasing your primary residence, you might be able to waive the penalty. You will need to speak with your IRA carrier for the details.

Without reasonable cause, it is preferable to roll your IRA to a self-directed IRA and you purchase the properties with your self-directed IRA. You can also do a backdoor to convert your IRA to a Roth. You will need to pay tax on this convention, but the proceeds from the property/investment will be free of tax.