Retirement Planning Guide

Of penalty from what Roth IRA withdrawal.

Typically 10% penalty on investment earnings withdrawn from your Roth account before age 59 to 1 / 2 of.

This means that if you find one exception early withdrawal, your withdrawal must meet two criteria to be organized as a percentage of taxa-fee properties and penalty free.

Those two criteria?

That you ...

Age 59 to 1 / 2.
Receive money in your account at least 5 years.
You must meet the requirements before you can be assured tax free and penalty-free withdrawal from a Roth. Of course there are exceptions.

We spent close to see the rules ...

The Roth IRA after age 59 1 / 2.

Distribution of any profits from the investment of your IRA Roth age 59 before 1 / 2 considered early withdrawal.

Except below remove other focus from income tax under the penalty, including withdrawal from Roth IRA.

Let phrase "profit from the investment. Important ...



Why?

Because you want the difference between the original and income support Roth. (Earnings from the investment) due support.

Original can help withdraw the tax free and penalty free time.

After every part of your deductible so you will not receive IRA Roth with after tax money.

Because you have to pay income tax then you should not have to pay tax on only the second to access your money.

However, earnings from investments is another ...

Think about it ... If you have an increase in investment in regular taxable brokerage account, those earnings are subject to tax. We both know how much the government taxes money love.

If you withdraw from the increasing investment from the government's account of the need.

To remember the original, you can withdraw your contribution to IRA Roth tax free and penalty free time.

If you withdraw benefits of any investment before age 59 1 / 2, you will owe income tax and penalty on early withdrawal 10% of these funds.

Found to be as stubborn?

Here's an example ...

You turn age 25, Roth and co-$ 3,000. You do not provide more help.

Fifteen years later you decide to close. Is now worth $ 10,000.

How much the $ 10,000 you will receive treatment?

Well before the closing, you do not owe taxes or penalties of $ 3,000 to $ 10,000.

Why?

Because you can withdraw your support at the same tax and penalty free software way.

But the remaining $ 7000 was holding investments. So it depends on income tax and 10% early withdrawal penalty Roth IRA.

Assuming tax rate to 25%, you owe $ 1,750 in income tax and withdrawal of penalty from $ 700 ... meaning $ 2450 to $ 10,000 of tax and penalty.

And leaves you $ 7550 after most of your closing.

To remember ...

Withdrawal of support from your old always ...

Tax and penalty free.

But withdrawal from the increase of your investment before age 59 that 1 / 2 under ...

10% penalty Roth IRA early withdrawal, as well as income tax enforcement.

Rules Year 5.

While you will age to 59 1 / 2, you also need to match demand more before they can withdraw money tax free and penalty free.

Demand.

Is called the 5-year rule.

And also means the general rules of the Roth IRA, you must have at least 5 years tax money before you can withdraw tax free and penalty -.

As required or not.

Suppose that the age 59 notification that your account is a good idea to convert your traditional IRA Roth. You that in 2007 the tax obligation as set conversion.

Money continues to grow and 2010 at age 62, you decide to withdraw that.

You can make tax-free and penalty free?

No.

Even if you have surpassed 59 age and 1 / 2 you have not found the rules for the 5 years of money that represents the conversion. You must be regulated and 5 years prior to the divestment of profit tax free and penalty free.

Participation was still withdrawn tax and penalty free.

However, earnings from investments must meet the rules for 5 years before it can be withdrawn tax and penalty free.

In this case, only four years through taxes. 2007 ... 2008 ... 2009 ... and 2010.

You meet the requirements of Rule 5 years and can be withdrawn in January of the following five tax.

In this case is the fifth tax year 2011. To January 2012 is when you can start the divestment gains tax free and penalty free both from your account.

Exemption from withdrawal.



But other cases when you can withdraw your investment earnings from Roth without paying taxes and penalties?