When can you safely make Roth IRA Withdrawals?
May 3rd, 2010 at 10:04pm Under Коледни подаръци
Can you make Roth IRA withdrawals without incurring any Roth penalties? The answer is yes, but there are a couple important criteria that must be met for each situation. And there are multiple scenarios that we could consider. But for simplicity let’s look at Roth accounts containing annual contributions only.
To begin with lets talk about two specific requirements. The first requirement is that you be 59 ½ years old. It is only after you reach this age that the IRS considers your Roth IRA mature. When you meet the age requirement your money can be withdrawn penalty free. In order for your money to be completely penalty free your money also needs to have stayed in the Roth account for at least five-tax-years.
So if you have a Roth IRA containing annual contributions only here is how to withdraw your money, with out penalty. First, you can withdraw what you have contributed. You can do this at any time and for any reason. So if you donated 2,000 dollars you can take out the full 2,000 dollars with out any penalty. A second way to withdraw money is to wait until you meet the age requirement and your account meets the five-tax-year rule. Once these requirements are met then you can withdraw all of the money, contributions and contribution earnings, without penalty. A third option is you could withdraw whatever money is needed before the requirements are met. However this early withdrawal will result in a 10% penalty on any money that has been earned from your contributions. So if you earned 1,000 dollars 10% would be 100 dollars.
None of us likes to lose or waste money. So, when it comes to Roth IRAs it is important to know the rules, so that we can avoid penalties. This in turn, gives us more money. And certainly many would agree, that the farther a person can stretch their retirement money the better.
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