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Let’s start with the obvious, like waiting until after 59 ½ years old to withdraw funds.Withdrawing annual allowed contributions before your taxes are due will also avoid the penalty, and the same goes for withdrawing excess contributions.And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free. Our partners cannot pay us to guarantee favorable reviews of their products or services. " At Nerd Wallet, we strive to help you make financial decisions with confidence. Retirement accounts aren’t always known for their flexibility, which is why the Roth IRA stands out for its relaxed early withdrawal rules: Because these accounts are funded with after-tax dollars, you’re free to pull out contributions at any time.To do this, many or all of the products featured here are from our partners. You can tap a Roth IRA, up to the amount you’ve contributed, for any reason, ranging from the responsible (there’s a hole in your roof and your kitchen is now a swimming pool) to the frivolous (you want to build a rooftop swimming pool above your kitchen).That doesn’t mean you » Read more: Everything you need to know about Roth IRA withdrawals If you don’t satisfy both points, a withdrawal of earnings is likely to come with income taxes and penalties.Some exceptions, outlined below, allow you to avoid the 10% early withdrawal penalty — but not taxes — on certain early distributions that aren’t qualified.
You don’t have to worry about taxes — or about accounting for which portion of your distribution comes from earnings, and which from contributions — unless you pull out more than you’ve contributed. You've held a Roth IRA for at least five years AND you are taking the distribution in one of the following circumstances: • You're age 59 1/2 or older • You're permanently and totally disabled • As a beneficiary of the Roth IRA after death of the account owner • To use up to ,000 for a first-time home purchase• You are taking the distribution for qualified education expenses • You are taking the distribution for unreimbursed medical expenses that exceed 10% of your adjusted gross income for the year (for 2018, it was 7.5%) or health insurance premiums while you are unemployed • You are taking qualified reservist distributions (for members of the military reserve called to active duty) • You are taking a series of substantially equal distributions • The distribution is due to an IRS levy • You have not held a Roth IRA for at least five years, but you are 59 1/2 or older, permanently and totally disabled, inherited the Roth IRA after death of the account owner or using up to ,000 for a first-time home purchase First, to avoid both income taxes and the 10% early withdrawal penalty, you must have held a Roth IRA for at least five years.If you don’t meet both rules for qualified distributions, the IRS will waive the penalty (but not taxes) if you take a distribution for one of these reasons: Outside of those criteria, you may be taxed and penalized on an early withdrawal of earnings.Depending on your tax rate, that could eat a third to half of the taxable portion of your distribution.It might give you peace of mind to know Roth IRA contributions can be tapped in a pinch.
They’re not a replacement for an emergency fund or an excuse to live above your means, but if things get dire, they can be a source of quick cash.
That’s true regardless of your age when you opened the account.