First-Time Home Buyer Empowerment Act

The First-Time Home Buyer Empowerment Act allows individuals to use funds from long-term 529 college savings plans to purchase a principal residence without incurring federal income taxes. To qualify, the account must have been open for at least 15 years, the distribution must be used within 60 days, and the total amount withdrawn for this purpose cannot exceed $35,000. If the home is sold or no longer used as a primary residence within five years, the beneficiary must repay the tax benefit, though this penalty decreases by 20 percent for each full year the home is kept. The law also adjusts the overall limit on special rollovers to Roth IRAs to account for these new home purchase withdrawals.