What is the penalty for Roth IRA early distributions?

Answer by  daltonbob (52)

If you are under the age of 59 and a half, there is a 10% penalty, plus you must pay tax on the amount distributed! The penalty must be paid when you take the early distribution and will severely cut into your retirement plan. There is no penalty once you reach age 60.

Answer by  cgroverla (516)

Contributions can be withdrawn at any time without penalty. Earnings in an early distribution are subject to income tax plus a 10% penalty. If the amount is from a conversion and the account is less than five years old, the entire early distribution is subject to a 10% penalty, but only the earnings are subject to income tax.

Answer by  ROTHholder (13)

You can take up to the total amount you put into the ROTH without penalty at any time. This means your own contributions, not including interest and dividends earned.

Answer by  John83 (20)

Early distributions from a Roth IRA carry an early withdrawal penalty. The penalty for taking an early withdrawal is 10% of the distributed amount. If the early distribution is also an unqualified distribution you would have to pay ordinary income taxes on any earnings that you receive from the distribution.

Answer by  dsmith42 (371)

You can withdraw money that you contributed to your Roth IRA without penalty, only earnings on that money have to considered for tax purposes. If you do withdraw earnings, you will have to pay tax on them.

Answer by  brian7754 (243)

There is a 10% penalty for premature distributions (younger than 59 1/2). However, you can take the distribution and do a rollover to another IRA within 60 days.

Answer by  Zacholson (56)

The regulation states that early distribution from a Roth Ira account before you reach age 59.5 is an extra 10% tax penalty on any Taxable money withdrawn. There are exceptions from this penalty however. If you are permanently disabled or bought a house amongst other things, you may be exempt

Answer by  Liz59 (10966)

I heard that if you do not meet the early distribution points, then the law is that you will have to pay the 6 percent penalty tax in your area.

Answer by  worker76 (773)

the penalties vary depending upon what company the stock is invested into. I have fidelity and i cashed out early and received a 20% hit. In retrospect it5's not worth it. they penalize you severely for cashing early. Don't do it unless it's an absolute last resort.

Answer by  Liz59 (10966)

The penalty consists of an early IRA withdrawal fee which amounts to 10%. It may be more or less depending on the circumstances.