Home Savings Act

Key Points

• Congress is considering a new plan that would allow people to take money out of their retirement accounts tax-free to buy a house. Usually, you have to pay income tax when you withdraw this money, but this bill would remove that cost if the money goes toward a down payment or closing costs.
• The policy would help more than just the account owner; it also allows people to withdraw money tax-free to help their children, grandchildren, or parents buy a home. This makes it easier for families to pool their resources to afford a place to live.
• This change would apply to most common retirement plans, including 401(k)s and IRAs. While this helps people buy homes now, a potential trade-off is that using this money early means there will be less saved up for when a person stops working later in life.
• If the bill becomes law, these tax-free withdrawals would be available starting in 2026 and would last through the end of 2030. This gives families a five-year window to use their savings for a home purchase.