Can I withdraw from a Roth IRA account before retirement?

Yes. In fact, you can withdraw contributions to a Roth IRA as early as the next day without incurring a tax or a penalty. The restrictions on Roth IRA withdrawals apply only to the account’s earnings.

To withdraw Roth IRA earnings income tax-free and penalty-free, you must wait until you’re more than 59 1⁄2 years old and have owned the account for five years. (Exceptions: You can withdraw IRA earnings penalty-free — but not tax-free — on up to $10,000 that’s used to buy a first home, or to pay for higher education, or due to death or disability.)

The withdrawal rules are a little different on a Roth IRA that you created by converting a traditional IRA. Withdrawals of the amount you converted immediately are tax-free, since you paid taxes on this money when you did the conversion — but not necessarily penalty-free: If you were under 59 1⁄2 years old when you did the conversion, you’ll owe a 10 percent early withdrawal penalty on any withdrawals taken within five years of the conversion date. (If you were over 59 1⁄2 when you do the conversion, you can withdraw penalty-free right away.)

But generally speaking, it’s not a good idea to start tapping a converted Roth IRA soon after the conversion. Your goal should be to leave the account untouched long enough for its tax-free earnings to more than make up for the income taxes you paid on the conversion — and that may take decades of investment growth, especially in a low interest rate environment. That’s why financial planners often advise people to think of a converted Roth IRA as money that’s earmarked for their heirs.

THE BOTTOM LINE Roth IRA contributions can be withdrawn anytime tax-free because they’ve already been taxed.



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