Roth IRA Questions: Withdrawl
Monday, June 23rd, 2008Q. I intend to retire at age 50. When I do, I’ll need income. Can I take money from my Roth IRA without paying any taxes or penalties?
A. Potentially, yes. Under the IRS ordering rules, you are allowed to remove your original contributions at any time without tax or penalty. In addition, after you’ve waited at least five tax years, you’re able to withdraw your original converted amounts without taxes or penalties. It’s only when you get to the earnings generated by the original contributions and conversions that you will have a tax and/or penalty problem.
Even if you do determine that you’ll have to break into the earnings prior to age 59-1/2, you may still avoid the penalty (but not necessarily the tax). If you remove the funds from your Roth IRA account using a distribution method that is part of a scheduled series of substantially equal periodic payments made over your life expectancy (and the life expectancy of your beneficiary), you may still be penalty-free.