First Time Home Buyer $10,000 Penalty Exemption TAX WITHHOLDING QUESTION

I’m considering taking a $10,000 distribution from a traditional IRA under the first-time homebuyer exception.

I understand that the distribution would still be subject to ordinary federal income tax, but the 10% early-withdrawal penalty may be waived if the funds are used for qualified home-purchase costs within 120 days.

My concern is tax withholding. If I elect 10% withholding, I would receive only $9,000 while $1,000 is sent to the IRS. Could the IRS consider only $9,000 as having been used for qualified home-purchase costs, potentially leaving the withheld $1,000 subject to the early-withdrawal penalty?

Would the cleaner approach be to:

• Elect 0% withholding on the IRA distribution;
• Use the full $10,000 for qualified home-purchase costs; and
• Make a separate estimated tax payment or increase payroll withholding to cover the ordinary income tax?

Has anyone dealt with this, or can a tax professional point to IRS guidance addressing whether taxes withheld directly from the distribution qualify for the first-time homebuyer exception?