I (30yrs) withdrew funds from a Roth IRA that was opened a year ago. Any penalty/tax implication. No earnings was made on my contributions..
Ashley
I (30yrs) withdrew funds from a Roth that was opened a year ago. Any penalty/taxes implication?
I (30yrs) withdrew funds from a Roth IRA that was opened a year ago. Any penalty/tax implication. No earnings was made on my contributions..
Ashley
{ 5 comments… read them below or add one }
Danny
Try 20% on for size.
Carlos
You can withdraw your contributions at any time without tax or penalty. You are only taxed (and penalized) if you withdraw earnings.
Brian
In a Roth, you can withdraw any amount you put in tax free…if you take out more (contributions+earnings) then the amount above contributions (earnings) is taxable. If you are younger than 59 1/2…which you are…then it would also have a 10% penalty. But! Since you are only taking out contributions…no worries.
Lucille
If you took out the money in the same tax year it was opened, then you can report the distribution as a correction on form 8606.
Usually if you take then money out before age 59 1/2 there are penalties but since there were no earnings the penalties may be waived. The penalty does not apply to any part of a distribution that is tax free, such as amounts that represent a return of your cost
Also there are certain withdrawls from a roth IRA which are permitted before age 59 1/2.
They also should be described in the instructions for 8606
Jeremy
Simply put, no. Why? Because the account had no earnings. No earnings, no taxes….period.
Exception: If the account was funded by a rollover from an IRA, then because is was less than 5 years ago, you will be subject to a 10% penalty to all amounts pulled out that were rolled-over.
Even though there may be no direct tax implications, this “pull-out” will effect any “Retirement Savers Credit” (see line 2 of form 8880). Finally, the Roth account fiduciary may charge you a fee for the pull-out or termination of the IRA.
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