Roth IRA Distributions – Use A Roth IRA Distribution as an Emergency Fund?
When considering a Roth IRA distribution, proceed carefully. Every Roth IRA withdrawal means the sacrifice of important benefits from previous Roth IRA contributions. Remember, all of the investment growth within your regular IRA is tax-free. Roth IRA Withdrawal Rules All qualified distributions from Roth IRAs are tax-free. To be a qualified Roth IRA distribution, the withdrawal must satisfy the Five Year Rule. In addition, to be tax-free, the distribution must occur: • On or after reaching age 59 ½ • At or after your death (and the account is paid to your beneficiary) • Due to your disability • In conjunction with a qualified “first-home” purchase (a withdrawal of up to $10,000) Remember, to be a qualified distribution and therefore tax-free, your Roth IRA withdrawal must satisfy both the Five Year Rule and meet at least one of the condit
Related Questions
- I am over 70½ and need to take a Required Minimum Distribution (RMD) from my IRA. Can I convert my assets to a Roth IRA before the RMD deadline to avoid taking this years distribution?
- Can I roll over distributions from a designated Roth account to another employers designated Roth account or into a Roth IRA?
- Will the Roth IRA owner be subject to the 10 percent additional tax on early distributions under IRC Section 72(t)?
