Are you considering making a Roth IRA withdrawal here shortly? In this article I’m going to cover some qualifications for Roth IRA withdrawals and when you should not pull money out of your Roth account.
When You Can
Under the current guidelines for the Roth IRA their are several circumstance were you are able to pull money out of your Roth IRA without facing any sort of tax penalty.
First off you can pull money out of your Roth tax free when you reach age 59 and a half. At this point the 10% tax penalty will no longer apply and you can pull out cash tax free for any reason you need it for. However one rule I should note here is that you must take a withdrawal by age 70 and a half or you could face up to a 50% tax penalty for not taking the minimum distribution.
Next, if you or someone in your close immediate family needs money for a college education you could do so.
Third, if were to buy or build a new home you could use up to $10,000 of the money in your Roth account to do so.
Fourth, if you were to become legally disabled and needed money to survive and pay for your personal bills you could do so.
Fifth, in the event of your death your money could be split up to your beneficiaries without being hit up with a tax penalty. However you would still have to consider estate taxes which could take a heft bite out of the money you pass on to your heirs.
When You Should Not Withdraw
Now that we know a few reason why you may be able to take a withdrawal from your Roth account lets consider a few reason when you should never pull money out.
First, to buy something you don’t need like a car or other unjustified purchases or just to erase credit card debt. These things will have no value helping you save for retirement and should be avoided.
Second and lastly, you should never withdraw your money if the market is down. If you pull the money out in a recession you need to consider that you will take an additional 10% loss on top of what you may have already loss due to tax penalties.
Knowing these reasons in the end my best advice is to leave the money in the account and save it wisely for the golden years that lie ahead for you.
