Roth IRA Early Withdrawal Penalty

The Roth IRA early withdrawal penalty is something that can be avoided in a lot of cases.  First, in order to qualify for a full withdrawal without the 10% penalty you must meet a few requirements.

Requirements for Full Withdrawal:

You must be at least 59 ½ years of age and you must have made contributions to your account for at least 5 taxable years.  If you meet these two requirements there will be no 10% penalty tagged onto your withdrawal.

However, if you do not meet these requirements and are filing for an early withdrawal you will be subject to the taxation unless you have meet these exceptions.

If you are purchasing your first home you can take out $10,000 out of your Roth IRA account tax free.  This amount cannot exceed $10,000 in your life time.  The next exception is if you owe money to the IRS.  You can pay the amount owed to the IRS out of your IRA account.  If you have a medical emergency in some cases money out of the Roth can be used to pay your insurance premiums.  Next, if you become disabled you can take the money out tax free.  And lastly, if owner of a Roth IRA dies then the beneficiary can take money out of the account without paying taxes.

If you have a question as to whether or not you will be hit with the early withdrawal penalty associated with your Roth IRA, talk to a financial professional and they may be able to help you withdraw the money tax free.

The Roth IRA  is a very strong investment because you do not have to pay taxes on the interest you made in your account upon withdrawal.  Unlike other Traditional IRAs and 401Ks the Roth IRA is tax free when you qualify for a Roth IRA withdrawal.

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