Withdrawing funds from your retirement accounts must be done carefully to avoid a potential 10% early withdrawal penalty.
Unfortunately, each retirement account type has different rules. Here are some tips for Roth IRAs.
Roth IRA basics
Roth IRA accounts differ from other IRAs in that your contributions are made in after-tax dollars. If you follow the Roth IRA rules, your withdrawals of any earnings in the account can be tax-free. Generally, to take advantage of the tax-free distribution from a Roth IRA:
If you do not comply with these rules you could be subject to income tax and a 10% early withdrawal (distribution) penalty. But wait! There are ways to avoid getting taxed and the early withdrawal penalty.
Roth IRA distribution tips
If you have questions regarding your situation, speak to an advisor prior to taking any withdrawals from a Roth IRA or other tax-advantaged retirement plan.
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