Submitted by bepis49 t3_127row8 in personalfinance
sciguyCO t1_jefiz0y wrote
You are allowed to withdraw however much you want from your Roth IRA at any time at any age. That is your money and you cannot be prevented from accessing it.
The big catch (which is probably your actual question) is that there are rules about whether that withdrawn money will be taxed or penalized. That tax + penalty is usually high enough that it's almost always a bad idea to incur those unless you absolutely, positively have to have more money right now or face severe consequences.
Roth IRA withdrawals follow a defined order depending on the category those dollars fall into. Here's a decently readable chart.
- "Contributory dollars" is the total of money you have put into your Roth IRA(s) since your very first deposit, minus any past withdrawals from your Roth IRA. So if you've made $5k of contributions since 2018 and haven't taken anything out since, that's the amount in this category and is the first thing used up from your current balance.
- The "conversion dollars" only matter when you've moved money from a non-Roth retirement account into your Roth IRA. That's probably not relevant to your situation, so I'll skip those.
- "Earnings" is everything else.
Withdrawals are always done as cash, so if you didn't have any in your IRA you'd have to sell some of your investments. That specific step is invisible to the IRS as far as taxes, they only look at money going into / out of the IRA as a whole.
So as long as you've contributed more than $1000 into your Roth IRA in the past 5 years, you can withdraw that much from your IRA without owing the IRS anything. That does effectively "waste" some of your past annual contribution limit and you lose out on future growth, but the government won't want anything from you for making that withdrawal.
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