How to Withdraw Money From a Roth IRA Before 59 1/2

by Fraser Sherman ; Updated July 27, 2017

Unlike a traditional IRA, withdrawals from a Roth IRA are normally tax-free. It's also easier to withdraw from a Roth before age 59 1/2 without paying a tax penalty.

How Roths Work

With a traditional IRA, you make deposits tax-free, then pay tax on everything you take out. If you withdraw IRA assets before you turn 59 1/2, you usually pay an added 10 percent penalty on the withdrawal. When you own a Roth, you pay regular taxes on contributions to the account. After 59 1/2, if the Roth has been open at least five years, your withdrawals are tax-exempt.

Withdrawing Roth Contributions

Taking a Roth IRA withdrawal is simple. Contact the bank or brokerage that manages your account and fill out the appropriate paperwork. Tell the administrator the amount you want to withdraw, and whether you want it sent directly to you, transferred to your bank account or rolled into another Roth.

Once the account administrator receives your request, she'll process it and send the money by the means you requested. The process works the same whether you make a withdrawal at age 40 or age 60.

There's never a tax or an early distribution penalty when you withdraw your original Roth contributions. For example, if you've contributed $30,000, you can withdraw up to that amount before turning 59 1/2 without having to pay the IRS a cent. If you have multiple accounts, you can take the entire distribution from any one account without paying tax.

If you withdraw so much that your distributions include any of the Roth's earnings from interst payments or investment appreciation, you pay tax on that part of the distribution, plus a 10 percent tax penalty if withdrawing early.

Reporting the Withdrawal

You must report distributions you take from a Roth as part of your tax return, on Form 8606. You use the form to report all your non-qualified distributions. Typically, any distribution before you turn 59 1/2 is non-qualified. Next, subtract the amount of the distribution you can credit to your original Roth contributions. What remains is the taxable part of your distribution.

You report the tax-free and taxable parts of your distribution, along with any traditional IRA withdrawals, on Form 1040. For example, if you took out $33,000 and $3,000 was taxable, you report the total amount, then the $3,000 that was taxable. If you owe tax penalties, you report that in the Other Taxes section of Form 1040.

Tips

  • You can withdraw up to $100,000 to buy a first home without having to pay an early withdrawal penalty. Tax law also allows you to take penalty-free withdrawals before you turn 59 1/2 if you're disabled.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.

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