WealthRabbit Support

What happens if I withdraw Roth IRA funds early?

Roth IRA withdrawal rules depend on whether you are withdrawing contributions or earnings. Your original contributions can usually be withdrawn at any time without taxes or penalties, since those dollars were already taxed before being deposited into the account. This flexibility makes Roth IRAs appealing for some individuals who want access to contributions if needed.

Earnings are treated differently. If you withdraw earnings before the account has been open for at least five tax years and before reaching age 59 and one-half, the earnings are typically subject to income tax and may also incur a 10 percent early withdrawal penalty. Certain IRS exceptions may apply, but the tax treatment can vary depending on the situation.

Because early withdrawals can reduce long-term growth and create unexpected tax consequences, many savers choose to consult a tax professional before withdrawing Roth IRA earnings.