Early withdraws?

[Guest sillyswany]

I started a Roth IRA in 1998. I am not yet to the 59 1/2 year old age to take out the money, but I want to withdraw it anyways. I read an article on-line that mentioned that if you opened the Roth IRA in 1998 or 1999, you don't have to pay the 10% penalty. Do you know if this is correct?

[BPickerCPA]

You will pay income tax AND 10% penalty on any EARNINGS withdrawn, but not on any contributions, or on any conversions made before 2000.

[John G]

I sure hope you have a good reason for pulling from your personal tax shelter.

Money is essentially on sale right now. Interest rates are extremely low. Everyone wants to refinance you home, sell you a car with zero or low interest, give you a line of credit, or provide a credit card with no interest owed for many months. If you have a short term need, you may want to consider these options first.

An awful lot of adults regret taking money out of a Roth, IRA, 401k or profit sharing plan. You can't always count on qualifying for these tax shelters, or having the funds to contribute. Most options have restrictions on the amount you can contribute in any year. Congress may change the qualifying rules at some future date.

For all of these reasons, I urge you to think a lot before you pull funds from a Roth.