- What is a Roth IRA?
- How is a Roth IRA different from a regular IRA?
- What are the advantages of the Roth version?
- Who can contribute to a Roth IRA?
- When can I take money out of a Roth?
- When do I have to withdraw money from a Roth?
- Which is better for me, a Roth or traditional IRA?
You can take money out of your Roth IRA anytime you want. However, you need to be careful how much you withdraw or you may get stuck with a penalty. In order to make "qualified distributions" in retirement, you must be at least 59½ years old, and at least five years must have passed since you first began contributing.
You may withdraw your contributions to a Roth IRA penalty-free at any time for any reason, but you'll be penalized for withdrawing any investment earnings before age 59 ½, unless it's for a qualifying reason. Money that was converted into a Roth IRA cannot be taken out penalty-free until at least five years after the conversion.
Not sure whether the money will be counted as contributions or earnings? Well, the IRS views withdrawals from a Roth IRA in the following order: your contributions, money converted from traditional IRAs and finally, investment earnings. For example, let's say your IRA has $100,000 in it, $50,000 of which are contributions and $50,000 of which are investment earnings. If you withdraw $60,000, the IRS will consider $50,000 of that to be contributions and $10,000 to be earnings. So any penalty would apply only to the $10,000.
