Roth IRA Early Withdrawal Rules

[@emeldcentor1474]

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[@ugojazzy7812]

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[@emeldcentor1474]

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[@TravisSickle]

😎

[@appleztooranges]

You can withdrawal any contributions, correct?

[@TravisSickle]

correct.

[@Elperromalo14]

If I wanna take out money for a house purchase, I can’t take out more than 10k?

[@crystallovesion]

I can you take contributions out even if it's been under 5 years?

[@appleztooranges]

Yes

[@ovie8977]

Hi How do I prove to the irs that I had an roth ira open for 5 year since I had one with vanguard in 2015 and now I have one with fidelity that I open in 2019. I have never filed taxes

[@antoniosyrakis9329]

So if I withdrawl my contributions early I still have access to my earnings once I hit the age limit? Can I still add more money to my account to grow after I withdraw some of my contributions? Also, if I want to withdraw just a small amount of my contributions I can take portions of my contributions out as much as I want without penalty?

[@TravisSickle]

contributions have to be earned income. Distributions are not earned. They were earned when they were contributed but not distributed.

[@nickowns55]

So can I take over 10000 for a first home buyer by taking all my contributions then take the gains as the 10k?

[@TravisSickle]

You can, however, while the gain will not have a penalty it will still have taxes if it’s before 5 years.

[@TravisSickle]

In general, I wouldn’t setup a plan from the beginning with the sole intention of taking it out early. It’s more of a safety net or an opportunity than “best way to save for college or a first home”. That’s even with the principal or gains. It’s the time that makes this account so good.

[@legacyorliabilitywithsammy7261]

If I withdraw contributions, it is completely out and the amount of compounding dollars on lowered for good, correct?

[@legacyorliabilitywithsammy7261]

*is lowered for good

[@k.c.wingert7179]

So if I put $6,000 per year into my Roth form 2005-2010 I have $30,000 of cost basis. Then in January I invest my $30,000 of basis in TSLA stock. Fast foreword to 2022 and my Roth IRA is worth $7,600,000. If I cashed out all in one year I'm looking at paying ordinary income + 10% penalty on the gain of $7,570,000???? Married filing joint would get me into the 37% tax bracket + 10%. What about setting up SEPP?

[@TravisSickle]

That’s possible but will only avoid the 10% penalty. You will still pay ordinary income tax under 59.5 with the 72t payments.

[@TravisSickle]

Depending on what you wanted to do with the money there are other possible ways.

[@k.c.wingert7179]

@@TravisSickle Is one possible solution to set up an self directed IRA and then have the self directed Roth IRA own my Farming LLC and I be the manager of it? I think I could rent to my brother and it wouldn't be a prohibited transaction.

[@TravisSickle]

@@k.c.wingert7179 yes, that direction.

[@TravisSickle]

something else to think about with the SEPP, is that you can split it between multiple Roth accounts. The SEPP only applies the that specific Roth and not in aggregate. If you didn't want the full amount of the distribution.

[@heyalenka19]

Also if one can take out their Roth to pay for college expenses... why can't we do this to pay for student loans? No one had an IRA during college 😅

[@philippadalino3416]

Thank you for the breakdown!

[@cdg156]

If I withdraw contributions from my Roth with the intent of paying it back, what are the rules for this?

[@TravisSickle]

There is a rule where you can rollover funds within 60 days, but after that it would be a distribution and then contribution.

[@firelordsozin3677]

Extremely well-made and extremely well explained. I smashed the like button

[@inferno3080]

Thank you! Saved my life

[@kelleysylvester5158]

Can I make a withdrawal in 10 years from my Roth IRA without penalty?

[@TravisSickle]

The part you put in

[@yonceydelatorre3802]

I pulled all of my IRA of $20k in 2019. Does the current COVID cares act help me to not pay the 10% withdrawal penalty?

[@TravisSickle]

No.

[@fertilityqueen7880]

I think you can now! There's some kind of paperwork you have to fill out stating how you were affected by covid

[@TravisSickle]

It’s only for 2020 not 2019.

[@christophergarrido2802]

Is there a way to take gains for any other reasons than listed? Granted you've had the account for at least 5 years.

[@TravisSickle]

Christopher Garrido yes, a few.

[@diablov6tps]

Ok so my dad just passed away in January this year......he had 3 roth IRA's acccounts. He had 3 beneficiaries listed. We got the funds in the account, but do we or will we be taxed on the accounts if we take the lump sum option....?

[@alfreddemons4983]

Extremely well explained!!! It answers all my questions about the early withdrawal rules.

[@jonv.6792]

How can I withdraw the money I contribute without affecting the growth on it? The contribution and growth is inclusive per share. So how can I make sure I only take out my contribution and not the growth to avoid penalty and tax? I appreciate your response.

[@TravisSickle]

Just look at the contributions. Should be on statements.

[@jonv.6792]

@@TravisSickle thank you Travis for the response, I really appreciate it. Can I ask 1 more questions. I’m planning to retire early together with my wife. I heard about accessing money from Roth in early retirement without penalty. I’m planning to rollover our Roth 401 to Roth IRA and the traditional part will be on conversion so we can access it too in 5 years. Hopefully fidelity will help us and guide us to properly withdraw 4% every year from our investment without penalty. Again thank you and more power to you.

[@watching4410]

Thank you. You have been the clearest, most understandable, and seemed to cover all your bases on the topic of withdrawal. (I might be biased because I was looking for a particular answer to a certain question). None the less, online keeps me 2nd guessing and videos take a while to get to the point. Video deserves more likes.

[@TravisSickle]

Thank you! What was the particular question you were looking for?

[@watching4410]

@@TravisSickle if I could withdraw at any time or if I have to wait 5 years and if it's for earnings and or if it is for the contributions Also, which I am still on the fence about, is if I could make deductions on it even though it's already been taxed.

[@sucre2025]

I need it to pay the IRS 😢

[@TravisSickle]

Oh don’t do that.

[@alexandermarchese3528]

What about States Tax Laws? I live in NJ and been trying to figure out if the same rules apply as I read otherwise (NJ taxes contributions withdraws from Roth IRA). Can you comment on that?

[@alexandermarchese3528]

@@alrocky nj tax bulletins GIT-2 (IRA Withdrawals)

[@dbaq9247]

thanks for the great info! i thought i have to pay penalty when i take out my contributions before 59.5 yo.

[@lavarbull9506]

Is there a specific penalty % for cashing out growth early? I know there's the 10% early withdrawal penalty but I can't find any specific percentages on regards to early withdrawal on growth.

[@TravisSickle]

Lavar Bull that is the penalty for taking out the growth. There is no penalty on the contributions.

[@TravisSickle]

Anytime you hear there is a 10% penalty for early withdrawals, it’s referring to the growth only. You can take out the contributions anytime for anything.

[@TravisSickle]

@Jason Doe remember that it will bump up your agi. Also, if it's low enough then you won't have cap gains either.

[@VanTran-rq3vz]

thanks for the video. I'm still confused on the 5 years. Do I have to pay tax if I only take out the contribution (no growth/earning) in LESS than 5 years?

[@TravisSickle]

No, no tax on contributions if you take them out before 5 years.

[@dougmead7669]

I saw in another video , you can draw out your "contributions" at any time with out getting a penalty "unless you rolled over the funds from another IRA account, if this is true, does it apply to TSP? Thanks!

[@TravisSickle]

The TSP does not allow Roth conversions. However, if you have a Roth TSP, you could take out those contributions. The 5 year rule applies to a Roth conversion, therefore, if you converted TSP to a Roth IRA, that would have a 5 year rule attached. There are exceptions to the rule, such as being over age 59.5 to avoid the 10% penalty.

[@dougmead7669]

@@TravisSickle never mind! lol

[@tysone1254]

I’m 15 and when I get my first paycheck from my first job I am planning on putting it in my Roth that I opened last year

[@charlessaco4495]

Hey Travis, have a question. If I withdraw the gain portion after the 5 years rules but before my 59 1/2 years old for traveling purpose. Do I have to pay income taxes or the 10% penalty or both on that portion?

[@musicful7036]

What forms do i need to file for Excess contribution removal on ROTH IRA ? ( my situation -No conversion, directly contributed, money already taxed ) .. what form i need to file , is it form 8806 or form 5329, or both or more forms . Please help me with this question, really appreciate it. Thanks!

[@heyalenka19]

So are you saying I can deposit $6k for the year of 2019 and then take out the $6k in a month if I choose... Even if I've only had my Roth account for less than 2 years. Are there any penalties for taking out your contributions if you have not had the Roth for 5 years?

[@ExtraSync]

How do you withdraw the contributions? I click the withdraw option and I get things about tax 10% fed and state min

[@micahcarter7765]

What about a ira to Roth conversion? If I’m leaving a company and initiate a 401k to Traditional IRA rollover, then do a Roth conversion can I use the conversion amount to withdraw or is that considered capital gains?

[@lijogeorge6908]

Can you use the contributions portion of the fund for your kids education? Or is it only for the account holder?

[@fannydiallo9444]

Good Video, although the real Swiss army knife of the finance world is the Index Universal Life insurance policy. It’s interesting that you used that analogy. For other financial professionals who understand how the IUL works, it represents the real analogy. You may consider getting yourself licensed as a life insurance agent, then you can truly provide your clients with the best product in the market. It will open your biz to provide the best options for your clients.

[@TravisSickle]

Thank you for the comment. I am licensed and we do think IUL's have their place.

[@FlaschDJ]

I have a question: - I opened the Roth in 2020 (age 67) with $5. - In 2021, I did a conversion of $10k (from a Traditional IRA). - In 2022, I did another conversions of 15k. - Let’s assume that NONE of my Roth had ANY gains, ever! Having no gains, will I be able to withdraw any amounts, at any time, penalty free? Or must I still endure waiting period(s)?

[@diegomarquez9505]

can i pull my money and invest it all in a index fund with out taking a hit on taxes? ive had it for 5 1/2 yrs. and its under 10K.

[@TravisSickle]

Diego Marquez you don’t need to pull your money to invest in an index fund.

[@diegomarquez9505]

Travis Sickle, I am aware of that, my question was specific but I thank you for your time.