Someone, please confirm my thoughts on this senario:
I converted a traditional IRA to a Roth IRA, over 5 years ago at $10,000.
Today, the Roth is worth only $8,000.

May I withdraw the $8K without owing any penalty, or taxes?
Thanks for your help.

Yes.
The amounts will be tax-free, because you already paid taxes on the amount at the time of conversion and
Penalty-free, because it has been at least five years since the amount was converted.

If the amount had included earnings, then other rules would apply….
See http://benefitslink.com/boards/index.php?s...86&hl=qualified

Two points:

First, why empty the Roth? Right now money is on sale. Interest rates are extremely low. You don't say the current value or what you plan to do with the funds. Have you considered alternatives? You can refinance your house, get a home equity loan, low cost margin equities at a brokerage, look for a zero interest credit card or intra-family borrowing at a rate that exceeds what most people get on CDs. Even if your Roth has a lower value now, you might want to keep the tax shelter going.

Second, you need to reconsider the type of investing that your are doing with your Roth. To be down 20% after 5 years suggests that you made some volatile investments or perhaps got caught with the tech decline (many tech funds are actually positive over the alst 5 years). You normally do not need to hit home runs or wager on long shots to do well and reach your retirement goals. A well diversified portfolio rarely has any 5 year period when it is down, and historically there are no periods beyond 10 years that are down like this.