Roth IRA Early Withdrawal Penalty?

This article contains all the facts you need…

http://www.your-roth-ira.com/roth-ira-early-withdr...

Qualified Roth IRA distributions (those that are tax-free and penalty-free) must meet two conditions as a general rule.

1) You must be age 59.5 or older – You must reach the age of 59 years and six months old during the course of the tax year in which you make the withdrawal.

2) You must meet the conditions of the 5 year rule – This basically means your Roth IRA account must be at least 5 years old from the time it was opened AND funded.

Also, keep in mind that you can withdraw your original non-deductible Roth IRA contributions at any time for any reason without having to pay taxes or penalties. This is one of the major differences between a Roth IRA and non-deductible Traditional IRA contributions (which are always subject to taxes).

With a Roth IRA taxes and penalties only apply to investment gains. So if you don’t meet the two rules above, then your investment gains are probably subject to income taxes and a 10% early withdrawal penalty if withdrawn.

I hope this helps!

Britt

I cringe when i hear someone say "Opening a ROTH is a very smart decision." Traditional financial planning is simply not working anymore, we have to learn to adapt to the new financial environment in which we live. A quick note on roth IRAs, IRAs, and 401ks: these are all government created tax loopholes that give the tax payer a supposed "advantage." However it has never made sense to me that access to my own money is limited by the government. Why should you incur a penalty for accessing your money? Why should you be told when you can start accessing your money? Please take this into consideration before you decide to let the government have some control over your retirement: what the government creates, the government controls. There is a way to receive all the benefits (plus more) of government sponsored retirement plans without giving up control of your money! here is a short video about this innovative idea-->http://www.thebankingconcept.com/infinitebanking.h...

good luck!

Before you invest in a ROTH.

- Do you have 6 months worth of living expenses in a savings account or brokerage?

- Do you have your cars paid off?

- Are you putting the max into the 401K?

- If you will need a new car soon, do you have the money to buy it for cash?

- Are all your credit cards paid off completely.

Opening a ROTH is a very smart decision.

But you NEED to be financially stable before taking that step.

The penalties are not bad since you already took out taxes on it.

10% if within 5 years

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Once you have had the account open for 5 years, you can take back contributions penalty free. (You would leave the earnings in the account.)

The forms keep track how much money you put in and how much you take out.

http://www.ira.com/