Withdrawal of Contributions from Roth IRA

May contributions to Roth IRAs be withdrawn at any time w/o penalty?
(no 5yr or age 59.5yrs old requirement)
If true, could you cite a reference in Pub. 17 or 590 that supports this.
I find in both that such distributions are not taxable but nothing that states explicitly that there is no penalty.



Any qualified withdrawal will not have an IRS penalty. (meaning removal of contributions…not interest earned if Roth owner is not over 59 1/2 and has had Roth at least 5 years)



The key here is that the return of contributions before the Roth is qualified are NOT qualified contributions, but nonetheless they are tax and penalty free. The exception here is the early withdrawal penalty on conversion contributions not held 5 years. Regular contributions are deemed to come out first and are totally tax and penalty free, but must be reported on Form 8606.

See Pub 590, p 65, “Are Distributions taxable?” This states that not only are qualified distributions tax free, but also return of regular contributions.

Page 66 further states after “Other Early Distributions” that unless an exception applies, the 10% penalty is due on the TAXABLE part of the distribution. Since the return of regular contributions is not taxable there is nothing to penalize.

Page 65 explains the penalty in the event of distributions from conversions that have not met the 5 year aging requirement.



Thanks, Alan, and esp for CAPITALIZING the word TAXABLE in your
paragraph on p. 66. I missed reading that word in Pub 590 even tho
I knew original contribution withdrawal was not taxable.



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