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Only if you withdrawl the investment earnings. You can withdrawl your contributions at any time without penalty. You can withdrawl the earnings as well without penalty, for certain circumstances, like a down payment for a home.</p>
<p>yes I agree, but not the entire amount as stated somewhere.</p>
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<p>Go read post 12 which I believe was taken from the IRS website itself. The contribution is not taxed when it is taken out prematurely, but there is a 10% penalty unless used for one of the exceptions. Otherwise, there would be no point to an Roth IRA if you could take it out anytime. It is meant to be a RETIREMENT account.</p>
<p>I agree, the contribution is never taxed because it was after tax money, it can’t be tax twice. But the interest rate cannot be withdraw early. But the point is if you put in let’s say $4000 per year and then withdraw that amount after so many years, how much interest is left over to grow? Not much. So withdrawing the money you contribute early is defeating the purpose. In this case , the OP was thinking of $500 amount, which even makes less financial sense.</p>
<p>I’m only arguing that post 21 says that you can withdraw the contributions anytime without penalty which is just not true. They are tax free because the tax has already been paid, but there is a penalty for withdrawing before age 59 1/2.</p>
<p>You can ALWAYS withdraw the money you deposited in a ROTH ira with NO penalty; you just can’t draw the interest it has earned unless it’s for the the purposes above.</p>
<p>anxiousemom: care to provide a link to where you found that information?</p>
<p>anxiousmom, agree with your post. That has always been my understanding about Roth IRA.
3bm, I think I misread your post.</p>
<p>Has anybody found proof that there is no penalty for withdrawing the principle from a Roth IRA? Because I just read an article that said that even an inherited Roth IRA must have been in existence for five years before it can be withdrawn without penalty.</p>
<p>I believe all the Roth IRAs you have to hold at least 5 years so I guess that means you can’t withdraw before then. I always put mine in a 5-year fixed CD then when it matures I move it somewhere else.</p>
<p>Excruciatingly detailed information about taxation of Roth IRAs is found in this document: <a href=“http://www.irs.gov/pub/irs-pdf/p590.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/p590.pdf</a></p>
<p>"Additional Tax on Early Distributions </p>
<p>If you receive a distribution that is not a qualified distribution, you may have to pay the 10% additional tax on early distributions as explained in the following paragraphs." See page 65.</p>
<p>So…the principle is not taxed if you withdraw it prematurely (before age 59 1/2) but there is a 10% penalty.</p>
<p>You really need to see a professional. There is more than a 10% penalty.</p>
<p>OP, listen to your father, he is a professional and puts food on the table.</p>
<p>I believe 10% extra on top of the tax on the gain. So if you put in $4000. The account is now $5000. You basis is $1000 gain. You pay 10% of $1000 + tax on $1000(whatever tax rate you fall in). The 59.5 and 5 years are 2 conditions that must be met unless you have exceptions that are noted in the IRS website.</p>
<p>I’m only objecting to posts 21 and 26 which claim you can withdraw the principle anytime without taxes or penalty because it’s after tax money which is simply untrue. It must be a QUALIFIED distribution to avoid the penalty.</p>