When can you withdraw from a Roth IRA?

When can you withdraw from a Roth IRA?

So you have worked your way up to save money for your retirement funds. The question now becomes, “Am I eligible to withdraw from my Roth IRA account? And if so, when is the right time to do so?”. We want to help answer this question by giving you more information before you make your next move. Feeling stuck with making wrongful decisions towards retirement planning and how you go about withdrawings should never feel like a burden. We are here to help and make things right. 


Number of Years on Open Account Matter

Are you able to withdraw from a Roth IRA account at any given time and age? The answer is yes! It is your account and therefore your own money. However, there are always exceptions. Even though you have full access to a Roth IRA, the number of years your account has been open before and after the retirement age of fifty-nine and a half matter. For example, if your account is open for more than five years, then your earnings will not be affected by taxes or penalization. On the other hand, if your account is under five years of opening, then you can continue to withdraw as long as you pay taxes towards your contributions. If we go into detail about what those certain circumstances consist of, you will learn that they vary and are extensive in the sense that every case is different. Please ask your financial advisor for further assistance as they can go over all specific limitations of deductions and withdrawals with you. 


Be Aware of Order of Distributions 

Now that you know a Roth IRA has no age limits and are aware of the number of years you must have your account open, you must also take into consideration the order in which you can also withdraw the money. The IRS has specific policies that include regular contributions, conversion and rollover contributions and earnings in chronological order. 


Take Note of Waiting Periods

Once you withdraw from your retirement account, you will need to wait another five years before your next withdrawal amount as it is considered your first contribution. Otherwise, a penalty of about ten percent will incur. There are ways to ignore the grace period such as when putting a downpayment on a first home, but as mentioned, you will have to pay for those contributions. It is important to note that waiting periods are counted as tax years and not necessarily calendar years. Be sure to go over with your financial planner over these calendar conversions to avoid fees. 


Are you ready to withdraw from your Roth IRA and need help learning if it is the right time? Or, would you like to open a Roth IRA and benefit from individual funding? We can help! Care Financial is a privately owned and operated business providing families, individuals and businesses with comprehensive wealth management strategies. Contact us online at www.carefinaicialonline.com or call us at 251-633-7122.