Explanation of Roth IRA withdrawal rules…when taxes or penalties apply.
Links in this video:
retirement planning Insights –
Taxes in Retirement –
#RothIRA #Roth401(k) #RothConversion
DISCLAIMER: This video is only helpful hints and education. It is not specific tax, legal or investment advice. Before considering acting on anything you see in this video, first consult with your tax, legal or investment advisor. While the information expressed in this video is believed to be accurate, neither Andy Panko, CFP®, RICP®, EA nor Tenon Financial LLC make any guarantees to its accuracy….(read more)
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How do I get access to the ira account do I need to call someone or go two a website need help take out money
Thanks so much for this info.
I recently started looking at my roth ira account info and I came across the Federal income Tax Withholding option.
Is there any reason why it's set, by default, at 10% federal tax withholding? Assuming I do make a qualified distribution that's both tax and penalty free once I retire, do I still need to withhold 10% for federal income tax? Or should I change that?
Thanks in advance for your help.
man… retirement accounts are so incredibly useful in ways that +95% of Americans have no idea about. I used to make about 150k/yr and am going back to medical school right now.
1. I was able to avoid (not evade lol) paying a bunch of income tax by funding the crap out of my IRA, and now I take out ~the standard deduction + education credit, every year from my IRA, tax and penalty free, coz my qualified education expenses are like 70k per year lol
2. I was able to pile about 3 years worth of contributions into my Roth IRA (~20k$), which effectively made the money disappear from the pile of cash the school/gov can see with the FASFA, which reduced my expected finical contribution. My school only looks at the first year's EFC and determines fin aid stuff for the next 4 years so I could just take the money back out when needed as it was always after tax
3. Because I am trying to avoid taxes, I can continue to day trade in my Roth IRA, and not have to claim any gains at the end of the year… instead I can basically pick and choose which year over the next 10 years which I will be making close to nothing, I want to pay the tax bill. Now obviously brokerage accts are a lot better coz of long term capital gains if I ever make a bunch of money…. but ide rather spread it out over 10 years as I see fit, than to play the brokerage game. I also can control my net income and make sure I am eligible for state funded health insurance or other financial assistance like food stamps/internet I think. I am morally opposed to this though.
Who ever said they have to be used for retirement investing? lol… I feel like theses are all secret super powers for "retirement" accounts that no one told me about and I had to scheme and read the gov tax website to figure out. Most recently I took out an extra 20k in student loans @ 5.5% and am going to buy I bonds with them. Student loan interest is still frozen and inflation is effectively erasing ~30k of my 280k debt every year right now lol. Might as well take out loans before the MD plus loan rates go up to 8-9% in a couple years…
thanks for the very thorough video
My hubby and I are both over 65 and retired. If we roll over/convert a traditional IRA into a self-directed ROTH IRA (iTrust Capital?) we understand that we will pay income tax on the converted amount. Will our adult children be able to inherit our new ROTH IRA tax free? Will they have to take full distribution within 10 years of our death because of the Secure Act?
If you take out $20,000 of contributions can you later start to contribute back into the roth ira?
Hi,
I am reinvesting my Div's now in my ROTH and when it matures, I wish to have them placed in my Money market so I can transfer them to another Institution. Can I do this or do I have to sell stock to get a Distribution?? Thanks
By far the best video on this topic, clearly explained, and help to "demystify" the topic. Keep up the good work!
Good morning
Question
I converted to Roth 401 K in
2017 and 2018 from traditional 401 K
And paid tax already and
I’m 62 years old
If I withdraw my money now 2022
Do I have to pay 10 % panelty ?
Please help
Thank you
Thanks Andy for this very informative video! I am currently leveraging the down market and doing more Roth Conversions, and this video answers my questions on the taxability of my withdrawals in the future.
I’m 19 and just inherited a Roth ira but I would like to buy a car how would I withdraw from my fidelity Roth ira rda account
If I contribute 5k last year but have no gains but want to withdraw my contributions can I take out the money at loss assuming 5k is now 4K ..can I withdraw the 4k
Andy…If I open my first Roth IRA at retirement at age 72 and do taxable conversions from my 401K am I subjected to the 5 year rule if I wish to withdraw taxable conversion money and / or gains a year or two later? Thanks
excellent! The 1099-r box 7 code "j" is a curious one. it seems to be an elastic code for the regular contribution, taxable and nontaxable contribution withdrawal when you have satisfied the cumulative 5 year wait period. I suppose, provided you have all of the statements to confirm the withdrawals, an audit should be straight forward and a waste of the IRS' time to even begin one! 'Mercia!
the principle savings one has put away for 5 years can be liquidated quickly for an emergency action and that interest could still compound into a tidy sum until the big 6-0.
I’m with Charles Schwab. I recently put in 6k ad the deadline is approaching. However, I realized that I need all that money now. I haven’t invested anything at all. When I go to transfer the money back to my bank account, I get the option to turn on and off taxes. Can I just turn both off then off since it was just my initial contribution? I’m just really worried that I’ll do something “wrong” if I do turn them off. Also, will I need to fill out any specific tax form if I do this??? Would appreciate your answer as I went in to Schwab and messaged other members and they couldn’t give me a direct answer
I want to withdrawal contributions from my Roth IRA account. I only contribute about $1200 per year but I need to withdraw at least $7000. Am I only allowed to withdraw the contribution amount within my current year or can I withdrawal contributions from previous years without being penalized or taxed? This is a small Roth Ira account that I’ve had for years and I withdraw $9000 from the account several years ago but returned the funds back into the Roth IRA account before 60 days. I can’t remember if it was a contribution withdrawal only or was it some of the earnings but I did not use the money and returned it back to the account. I have a couple of credit cards I would like to use this money for to pay off.
Great.
All the other videos were made by windbags or salespeople. Thx
The government – We are going to help you save and invest for your retirement.
me – thanks, but no thanks
government – No, we insist.
me – ugh, fine.
government – Its going to be simple, and we are going to not tax you on those investments.
me – okay, this sounds better than I thought.
government – proceeds to fill up a thick college textbook sized rulebook with legal language.
me- but I don't understand this.
government – get a tax lawyer.
me – I can't afford one.
government – bahahah, then guess.
me – ugh, its too complicated.
government – please just guess.
me – fine.
government – mahahhahahahah wrong again. suck it b*tch. go eat rocks! we have more rules to write to help the poor. They're so many that don't even have a retirement plan. They need our help.
Retirement Planning Demystified, your the best!! thanks a million. Best video on youtube about taking Roth IRA distributions.
THANKS FOR EXPLAINETION, I have question, if I rollover my 401K in to ROTH IRA till I have 5 years hold.
Thank you for your video. I was wondering if you can give me a "pointer". My financial advisor opened a Roth for me , which I have contributed( max. Of 7, 000) to for the last two years. The problem is , when I went to add another 7 to it this year he had a rude awakening. He opened that Roth with my unearned income( settlement from an injury ). He has no clue how to get that money out without me being taxed! Any pointers you can offer would be greatly appreciated, PLEASE. Thank you.
I'm 56 years old and opened a roth IRA in 2021. ( not a rollover ) I contributed a total of 6950.00 for a few months but made no gains. I withdrew all of it in the same year. Did i mess up?
I contributed 4500 in my charles schwab personal roth ira. It grew to 5000. I recently sold my 4500$ worth of shares of the invest I chose in mg roth and now the order status notes that "early with penalty". What did I do wrong?
Thank you for the great video! Quick question on gains: when you talk about "gains", do they also include gains from taxable conversion and nontaxable conversions?
Great video very informative, I just have a question. I’m 64 now and stop working since last year but not collecting social security yet. Can I still make Roth contribution to my account? If I can I don’t need to hold it for 5 years anymore if say I started getting the distribution in three years right? Thank you andy your channel had helped a lot of people. God bless!
Another great video!
Hello Thanks for the great video.. QQ if i am under 59 1/2 and i am meeting 5 year rule and i take earning money out for qualified education.. I know i wont be paying penalty but what about tax on earnings?
I have a Roth IRA and its like 10 years old. I am only 37 years old. 75% of my money in there is from Capital gains. I would like to pull some of it for starting a new business. Is that possible?
Straight to the point. Love it
if i am only 49 and if i were to pull out all my 'contributions' from my roth just to put that money into a regular 'brokerage account' that i know i will have to pay taxes on…. will it be better or 'a wash' or worse than just taking money out early directly from the (10+ y/o) roth?
what if i am not 60y/o yet and i want to withdraw a large amount from my roth (that is 10+ years old)? what is the penalty and tax hit? lets say for $1,000,000 and on 100% gains? i was hoping you'd cover the penalty part of this in the video but am grateful you did the 'positive' side of it so well. THANKS!
This advice is not accurate. Does not reflect US Tax Code and US Law.
I had to withdraw from my Roth IRA last summer because of Covid wrecking my business. I am still hurting and need to withdraw again – I fine paying penalties etc but I can’t find anywhere on the internet whether I am even allowed to early withdraw more than one time in a year.
My parents don't have any income but they are my dependents. Can they open Roth IRA and I put maximum money in their Roth IRA accounts in addition to maximize my Roth account? Or they have to have income to contribute to Roth IRA?
Thanks for the info. The 59 1/2 age limit comes up a lot in this discussion which confuses things a bit. However, what happens to the order of withdrawal for activities AFTER age 59 1/2 which is the case for most retirees.
For example:
Assume the individual is already 59 1/2, and has a five year old Roth IRA with $5k and performs the actions below. Is the order of withdrawal is still the same? What is taxable?:
1) He makes a 401k conversion into a Roth IRA of $10K.
2) He pays taxes on the $10K 401k conversion out of pocket. Now he has $15K in the Roth IRA.
3) He puts the $15K of the Roth IRA in a fund with 10% return. At the end of the year he has a $1500 gain.
4) Considering part of the gain came from $10k he converted to the account, can he withdraw the $1500 gain? Or does five year apply to $10k portion converted?
5) Do taxes/penalties apply to any portion of the withdrawal?