If you are an IRA account holder, you cannot borrow money from your retirement plan to buy a home yourself--or to help a child or grandchild buy a home--without paying federal income taxes.

To deter such abuses, Congress imposed a 10% penalty on most "premature" withdrawals (before the age of 59 1/2) from IRA accounts and required account holders to pay income tax at their regular rate on the amounts withdrawn.

In 1997, Congress moved part of the way to rectifying the disparate treatment of IRA accounts by eliminating the 10% penalty for IRA holders who withdraw up to $10,000 for a home purchase. But IRA holders who make home-related early withdrawals still have to pay income tax on whatever they pull out.