ROTH IRA Question

[Guest buddaus]

When I was like 14 someone gave me 2,000 into a Roth IRA with charles schwab. Well the money went down to like 400 bucks and I withdrew it. I didnt pay any fees or penalties. Atleast not that I know of? I was like 14. Will that have any effect on my current Roth IRA that I have with T.Rowe price now that im 23. Also when I hit 59 1/2 would what I did when I was 14 and withdrawing that 400 dollars effect me in any way? Or am I ok?

thanks! Dave

[John G]

You can withdraw contributions (not earnings) at any time. Since your account dropped below your initial 2,000 you have no problem.

I hope you learned something from that early experience. Sounds like someone put you into dot.com, tech or telecom investment. In normal times, a typical investment in stocks or stock based mutual funds would come close to doubling in seven years.

Over the course of your lifetime, you will pay Wall Street type "tuition" many times. Even if you have 20 years of experience, you can have some investment that is disappointing. However, on average, a combination of investments should grow you nest egg.

You are way way ahead of most 23 year olds. Both because of your prior experience, and because you have begun a Roth.

So.... in what have you invested this time?

Post again if you have other questions.

[Guest buddaus]

thanks. I feel much better now..... I was young and foolish back then. I started playing the market at 13, did very well. Bought a mustang for my first car then a new trans am at 17. My dad loved that! Lost a lot in 2000 like everyone, but you learn. Anyways, i am investing my Roth IRA into good mutual funds, T rowe price and some royce funds. I own a business so I like to put away a set amount each month and forget about it. Any tips! I want to retire at 55.

Dave

[Guest buddaus]

I was scared that I would turn 60 and have some $20,000 in back fees due... But im 100% ok right?

[John G]

If you are sure that it was a Roth - then you can always take out contributions. I don't think there are any filling requirements - maybe one of the accountants that post here will address that component. If you completely closed this Roth and had no other IRAs, you could have tried to write off the loss - but there are still hurtles and that's water over the dam at this point.

If your own business is very successful, you have many other options for setting aside even more funds. There are SEP/IRAs, Keoghs, 401k, Pension/profit sharing, etc. options. All of these have a tax shelter component, but are not tax free like Roths. On the plus side, you can set aside a much greater percent of your income. You might also have options for selling your stock (if you have incorporated). So.... start reading up on plans available for small business or sole propietors. And talk with your tax accountant, who probably has seen dozens of different formats used by their customers.

[Guest buddaus]

Yes, I am sure it was a roth and that was the only Roth IRA account I had. I didnt try to write any of the losses off. I just withdrew the last 400 I had left.

Dave