What are the Roth IRA withdrawal requirements?

February 7th, 2011 Admin Leave a comment Go to comments

You need to know the Roth IRA withdrawal requirements, especially if you plan to withdraw money from your account several times in the near future. The lack of information can cost you unexpected taxes or penalties that could be quite high. It would be useful to explore everything you need to know about roth ira. So to make sure this does not happen to you, it is essential to ensure that any withdrawal is a qualified distribution, because of a qualified distribution is exempt from tax and penalties.

So what is the qualified distribution? You can withdraw your principal without penalty. In general, the gains can not be withdrawn before you are fifty-nine and a half years old without penalty. So you can get your money after age 59 ½ without penalty. Your IRA must be open at least five years before you will be able to withdraw.

You can always withdraw money from your Roth without penalties, if you withdraw as much as your originally contribute, or it can be less. This is not the case with most retirement accounts such as traditional IRAs. Since your account is funded with after-tax income, the IRS considers you as having already paid tax on income contribution. Therefore, do not worry about triggering taxes or penalties when you remove a major contribution. However, you should worry about triggering taxes and penalties if you withdraw the gains from your main original contribution.

One of differences between ira and roth ira is the holding period. So a Roth IRA has the requirement of minimum holding period. To withdraw investment earnings without penalty and taxes, even after you’ve passed the age of are fifty-nine and a half, your original contribution or rollover must have been at least five tax years preceding the withdrawal of earnings.

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