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re: Taking out money from a retirement account?
Posted on 1/22/13 at 11:40 am to Broke
Posted on 1/22/13 at 11:40 am to Broke
Actually it is only tax free if it is a qualified distribution.
You won't have to pay taxes on the money that you put in it (and in fact you can take whatever money you put in, out, at any time no questions asked).
But you'll have to pay taxes on earnings.
You won't have to pay taxes on the money that you put in it (and in fact you can take whatever money you put in, out, at any time no questions asked).
But you'll have to pay taxes on earnings.
Posted on 1/22/13 at 12:17 pm to Volvagia
For a Roth, you can take out at any time without penalty up to the amount you have put in. Anything above that is treated much like a traditional IRA, i.e. interest and penalties do apply.
Example: Les Miles and John Chavis each contribute $1000 to their Roth accounts. At the end of the year, Miles' account is worth $1100 and Chavis' is worth $900.
Miles can take out $1000 without penalty. Chavis can take out the full $900, again without penalty. If Miles takes out $1100, he will owe tax and penalties on the last $100.
Example: Les Miles and John Chavis each contribute $1000 to their Roth accounts. At the end of the year, Miles' account is worth $1100 and Chavis' is worth $900.
Miles can take out $1000 without penalty. Chavis can take out the full $900, again without penalty. If Miles takes out $1100, he will owe tax and penalties on the last $100.
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