Taking money out

[Guest gzwick26]

I have put $10,000 into my Roth IRA through Vanguard for the years 2004,2005,2006. My account is valued at over $12k. I would like to take the $10,000 that I've put in. I believe that I can take this amount out without penalty, however when I attempt to do it on the website, it says that this is an illegal distribution(early withdrawal) and will be subject to penalty. Should I just ignore this and take the money out being that it's only money that I put in.. Thanks.

[John G]

If all of these amounts were "contributions" and not related any IRA conversions, then you can take out ALL of the contributions without penalty.

BUT... why? Money is cheap right now. You can get low HELOCs (Home equity loans), signature lines of credit (if you have a good job, almost every bank will loan you 10,000 on your signature), buy now pay next year for cars/appliances, 0% fiancing from home repair companies, and sometimes 0% credit card teasers. You might also be able to do an internal family loan by offering an uncle or grandparent a return better than the local CD.

The value of a Roth is that you are getting a long term tax shelter. Think twice before withdrawing funds - even if you can do so without penalty.

[Guest gzwick26]

Thank you for replying so quickly. I wanted to make certain that I was correct in taking out the money without penalty. It was all contributions and nothing else. Thanks again.

[Guest allancoleman]

John G's advice is excellent , gzwick26 . Taxfree forever Roths work best when you leave'em alone for awhile to mature and do their magic for ya . And some of us , along with yourself I'm sure , have struggled mightly to save to get those Roth dollars in those Roth accounts to earn these taxfree dollars for you for the future .

John G's right . Figure out some other way to get that money you need . You'll be dang glad twenty years from now if you didn't touch that Roth .

[Guest gzwick26]

I will do my best to not take the money out. Thanks for all of your help and advice.