(1) The funds held in an account may be withdrawn by the account holder at any time for eligible expenses. Withdrawals for the purpose of paying eligible expenses shall not be subject to the 10% penalty.

(2) Withdrawals to pay for eligible costs must be supported by an itemized statement of the down payment and allowable closing costs that were paid by the account holder. The account holder must sign the statement attesting that these expenses are eligible costs.

(3) The burden of proving that the withdrawal from a savings account was made for eligible costs is upon the account holder and not upon the account administrator. Each account holder must maintain documentation of eligible costs.

(4) There shall be a penalty for withdrawal of funds by the account holder for purposes other than the payment of eligible costs except upon the death of the account holder. The penalty shall be 10% of the amount of the withdrawal from the account and, in addition, the amount withdrawn shall be taxed as ordinary income in the year the funds are withdrawn for non-eligible costs.

(5) The direct transfer of funds from a savings account to a savings account with a different account administrator shall not be considered a withdrawal for purposes of this rule. A direct transfer is when monies in an account are transferred to a new account without the beneficiary or account holder receiving any funds.