ROTH IRA Question

[Guest emccarty]

If I transfer money into bonds in a ROTH and recieve payments, can I opt for collecting that payment without paying the 10% penality tax? OR can I invest in dividends stock and take the money out that way?

Thanks for any references and anwers

[Demosthenes]

Short answer, No.

All the assets and all the income in an IRA is held in the Trust. Effectively the Trust owns the assets and that's the way the securities are registered and that's where the income/dividends get paid. If you remove income from the Trust, it's a distribution subject to the appropriate tax and penalty.

IRS Pub. 590 is a good place to start.

[John G]

A clarification - you contribute cash to a Roth.... you can not contribute stock shares, bonds.

You can take out contributions without penalty - they come out first. I am not sure if you are looking to have periodic payments now, or in retirement. Early in your life, you normally want to build the assets and keep everything compounding within the Roth. Later in life, you would eventually make an election (there are not IRS rules on age or minimums) to take distributions in lumps, equal payments, or whatever you choose.

[Guest emccarty]

Thanks for the help. What my plan is putting in money and trying to retire in my early or late 40's. I don't want to pay the IRS any more money they I have too I figured I could live on 29,000 of today's dollars and then start my own business, but I have a safety nest...

Thanks