Roth IRA Withdrawal
Roth IRA Distribution
Roth IRA withdrawals are divided into two main categories: Distributions (qualified and unqualified) and withdrawal of capital. You can withdraw the amounts you put in (your capital) tax and penalty free at any time. Earnings or gains in excess of your principal contributions are subject to distribution rules. Qualified distributions are any amounts withdrawn after having been in your Roth IRA for 5 years and you are at least 59 1/2 years old or you are disabled or buying your first home or made to you as a beneficiary of a deceased Roth IRA owner.
Most other distributions are considered unqualified distributions and you will likely owe a 10% tax penalty. Required minimum distributions (RMD) do not apply to a Roth IRA. However, you can not use distributions from your Roth IRA to satisfy required minimum distributions, RMD, for your traditional IRA.
I have a question on what constitutes a qualified distribution. I am disabled as of Aug 18th 2010 by SSA. I am 50 years old this Aug 19th, 2010. I have some economic hardship also. So I need to take out a distribution from my Roth that was started in 2002.
Q. How do I determine “original contributions” from the mutual funds in my Roth? I was told by my mutual fund company that I could take out money from any of my mutual funds in the Roth IRA just as long as they add up to original contributions placed in the Roth for five years out of 2002. Is this a correct calculation?
@Michael, Yes that is a correct calculation. Your original contributions are the amounts you put in, so if you deposited $5,000 in your Roth IRA and it has been 5 years since you have done so, then you can take out that $5,000.