Early Withdrawal

Archive for May, 2009

Question: Early Withdrawal of a Roth IRA – contributions more than accounts worth Q?

I need to withdraw money from my Roth IRA. From what I have read online, I should be able to withdraw what I have actually contributed without penalty/tax. However, my Roth IRA account is invested in mutual funds and because of the dive the stock market took, it is actually worth a bit less than what I have actually contributed to it since opening it in 2001. If I were to cash out the majority of it ($6K out of $7K+) could it even be possible that any of that would be considered earnings & thus result in penalty/tax?

Answer: You can with draw the principal without penalty or tax. Sounds like your account balance is below that, so you should actually be able to close the account without tax consequence…

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