1. What is a Roth IRA ?

Roth Contribution Tax Savings

Be sure to track your Roth contribution history. You are allowed to withdraw contributions anytime with no taxes or penalties. But the earnings on your contributions are a different story.

If you withdraw earnings from a Roth IRA before retirement, you may have to pay income tax plus a 10% penalty. That’s why it is so important to leave your funds in the account until you reach age 59½, an age set by the IRS for retirement account withdrawals.

There are a few exceptions. You can withdraw up to $10,000 for a first-time home purchase without penalties but do have to pay tax. Using Roth IRA funds for qualified education expenses is also allowed.

There are a few other, less common allowed early withdrawals, including disability and paying for medical expenses.

Leave a Reply

Your email address will not be published. Required fields are marked *