Comments on: 5 Things to Know About Roth IRA Withdrawals

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

That is a shame that they have a penalty like that. As far as I know you have to follow IRS rules regardless of what the custodian (Ins Company) charges you. If I were you, I would talk to the Ins Co. about the penalty, why you are paying it, and ask if they are collecting it on behalf of the IRS.

By: Stacey Wilbur

Stacey Wilbur — Thu, 01 Jan 1970 00:00:00 +0000

They are saying an early withdrawal penalty. Have it thru an insurance company. Do I still have to pay taxes on the $162.76 even though they’re charging $166.50 before they dispurse?

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

@Stacey – I’d like to know more about the penalty the “company” is charging you. What is that for?

Your earnings so far look to be the difference between 2900 and 3062.76, or 162.76. You will have to pay taxes and a penalty on the $162.76 unless you have some type of qualifying hardship. In that case, you can avoid the penalty.

By: Stacey Wilbur

Stacey Wilbur — Thu, 01 Jan 1970 00:00:00 +0000

I have put in $2900 on my Roth IRA. The accumulated balance is $3062.76. The company will charge me $166.50 penalty to withdraw. Will I have a tax penalty for early withdrawal? The policy is only 3 1/2 years old and I’m 38 years old. As I see it, I’ve got no “earnings” only contributions, right?

By: PT

PT — Thu, 01 Jan 1970 00:00:00 +0000

@Kaye – Thanks to you for including me. I submit all the time to that carnival and you are the first host in a while who has included me.

By: Kaye Swain - SandwichINK for the Sandwich Generation Issues

Kaye Swain - SandwichINK for the Sandwich Generation Issues — Thu, 01 Jan 1970 00:00:00 +0000

Thanks! That’s the best explanation I’ve seen for the Roth IRA! I appreciate the info and I appreciate your including it in the latest Boomer and Senior: News You Can Use Blog Carnival at SandwichINK. Very useful information!

By: Kacie

Kacie — Thu, 01 Jan 1970 00:00:00 +0000

We are going to set up an IRA with my husband’s next paycheck. It’ll be intended for retirement, but it also might be tapped to help our house down payment, or if something catastrophic happens and we wipe out our emergency fund and other savings. (hope not!).

I do think it’s worth it for people to consider any other avenues before tapping their retirement accounts.

I want the money to grow and to be there in my old age, ya know?

At the same time, owning a house free and clear is a part of our retirement plan, so it might help us get to that point a little quicker (and then be able to invest in other areas to even potentially make up for the withdraw.)

By: Mike Piper

Mike Piper — Thu, 01 Jan 1970 00:00:00 +0000

Ha! I think that applies to every tax- and investing-related topic for me.

With writing, we get the time to research stuff beforehand rather than being put on the spot.

By: PT

PT — Thu, 01 Jan 1970 00:00:00 +0000

Good point, Mike. The 5 year rule is something I could have expanded on a bit. I made the change above to reflect your comment there.

Agree on your conversion comment. That whole tax basis thing is just hairy. As a CPA, ironically I’d rather write about them than actually do them.

Thanks!

By: Mike Piper

Mike Piper — Thu, 01 Jan 1970 00:00:00 +0000

It’s admittedly a small point, but I’d suggest changing the above to say, “Your initial contribution to aRoth IRA needs to have been made 5 or more years prior to the time your withdraw for retirement.”

Also, I think it’s worth mentioning that if you’ve executed a Roth conversion from a traditional IRA for an amount that was not entirely deductible originally, things get a heap more complicated.

All told though, great job writing up a complicated topic!