Know More About Roth IRA Withdrawal Rules
Roth
IRA
is indeed a very good retirement plan for elderly people who would like to lead
a life of dignity and pride after retirement. There are several advantages
associated with this particular retirement plan and one the most visible
benefits is the handsome and attractive tax benefits that form a part of this
plan. Additionally, there are also some other benefits like early withdrawal,
good interest rates, etc., However, as a customer you would be better off, if
you clearly understood the withdrawal rules governing this scheme so that you
can avoid some pitfalls when you actually want to withdraw some funds for a
medical emergency or some other cause. Over the next few lines we will try and
understand a bit more about the withdrawal rules.
The first and foremost information that you should be clearly aware is that as a customer you are free to withdraw your principal without having to pay any penalty on the same. Coming the earnings which accrue in your Roth IRA account, in the normal circumstances the earnings cannot be withdrawn before the age 59.5 without any penalty. After this age you are free to withdraw even the interest earnings without paying any penalty. One more important and very crucial piece of information is that your account should be open for at least five tax years before you can think about the withdrawal of your earnings.
The above basic rules must be clearly understood by customers or prospective customers to avoid confusion and problem at a later date in time. If you are withdrawing an amount which is equal to or less than the original contributions after the above five year lock-in period, you are not supposed to pay any interest or tax on such withdrawals. This is because as your account is funded post-tax payment, and hence the Roth IRA product is viewed as a product on which tax is already paid and hence a second round of taxation is not necessary.
The first and foremost information that you should be clearly aware is that as a customer you are free to withdraw your principal without having to pay any penalty on the same. Coming the earnings which accrue in your Roth IRA account, in the normal circumstances the earnings cannot be withdrawn before the age 59.5 without any penalty. After this age you are free to withdraw even the interest earnings without paying any penalty. One more important and very crucial piece of information is that your account should be open for at least five tax years before you can think about the withdrawal of your earnings.
The above basic rules must be clearly understood by customers or prospective customers to avoid confusion and problem at a later date in time. If you are withdrawing an amount which is equal to or less than the original contributions after the above five year lock-in period, you are not supposed to pay any interest or tax on such withdrawals. This is because as your account is funded post-tax payment, and hence the Roth IRA product is viewed as a product on which tax is already paid and hence a second round of taxation is not necessary.
