Q. Can I take money out of my IRA to make a down payment on a condominium?

A.Yes. Whether you'll owe any taxes or penalties depends on what kind of IRA you have, the size of the withdrawal, how much you've contributed and how long you've had the account.

If you have a traditional IRA, you'll have to pay income taxes on whatever you withdraw, because contributions to this type of account are tax deductible and taxes on that, as well as your earnings, are deferred until you take it out. You'll do that by adding the value of your withdrawal to your taxable income on your 2008 tax forms.

But, if you haven't purchased another home during the last two years, you can use up to $10,000 for a down payment without having to pay the 10% penalty for making a withdrawal before age 59 1/2. If you need a larger down payment, you can take out more, but anything over $10,000 will be subject to the 10% penalty.

With a Roth IRA, you can withdraw contributions whenever you wish without any additional taxes or penalties, because the money you put into this type of IRA is not tax deductible. It already has been counted as income and appropriately taxed.

If the account has been open for more than five years, and you haven't bought another home in the previous two years, a down payment is considered a "qualified distribution" and any earnings you tap also will be tax- and penalty-free. If the account has been open less than five years, you'll have to pay income taxes on any earnings you remove.

Just try and keep IRA withdrawals to a minimum, because the money you take out is no longer working for your retirement.

A withdrawal is not a loan and cannot be paid back. No matter how much you take out, you can only put back the federally mandated maximum of $5,000 into your account each year (assuming you're under 50 years old).