Individual Retirement Account (IRA)/401(k) income refers to income received from an IRA. The Mortgagee must verify and document the borrower’s receipt of recurring IRA/401(k) distribution income and that it is reasonably likely to continue for three years. The Mortgagee must obtain the most recent IRA/401(k) statement and any one of the following documents:
• federal tax returns; or
• The most recent bank statement evidencing receipt of income.
For borrowers with IRA/401(k) income that has been and will be consistently received, the Mortgagee must use the current amount of IRA income received to calculate effective income. For borrowers with fluctuating IRA/401(k) income, the Mortgagee must use the average of the IRA/401(k) income received over the previous two years to calculate effective income. If the IRA/401(k) income has been received for less than two years, the Mortgagee must use the average over the time of receipt.
For additional information see Handbook 4000.1 II.A.4.c.xii(H)(3) or II.A.5.b.xii(H)(3) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh