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Roth IRA withdrawal and unemployment benefit question
Posted on 11/12/17 at 6:56 pm
Posted on 11/12/17 at 6:56 pm
Okay, so I was laid off a few months ago and have been receiving unemployment benefits in the state of Texas since then.
If you've ever had to do this, you likely know the benefit amount isn't much. I can pretty much make my rent payment and my bills off of it, but I'm about two months in and my normal savings are almost dried up due to other expenses.
I have a Roth that has a decent amount of cash in it and I'm debating possibly tapping into it (I know, I know people on here always say this is a bad idea) to stay afloat and not rack up credit card debt.
My question is if I decide to withdraw from the Roth, will I have to report that as income and possibly lose my unemployment benefits? Or can I withdraw it without penalty regarding the benefits?
I haven't had the account for more than five years so I know I'm going to take a 10 percent tax hit.
Thanks in advance for the help.
If you've ever had to do this, you likely know the benefit amount isn't much. I can pretty much make my rent payment and my bills off of it, but I'm about two months in and my normal savings are almost dried up due to other expenses.
I have a Roth that has a decent amount of cash in it and I'm debating possibly tapping into it (I know, I know people on here always say this is a bad idea) to stay afloat and not rack up credit card debt.
My question is if I decide to withdraw from the Roth, will I have to report that as income and possibly lose my unemployment benefits? Or can I withdraw it without penalty regarding the benefits?
I haven't had the account for more than five years so I know I'm going to take a 10 percent tax hit.
Thanks in advance for the help.
2
Posted on 11/13/17 at 9:13 am to McCaigBro69
Withdrawals of contributions are tax free. If you withdraw more, then you will be subject to income tax and 10% penalty.
Posted on 11/13/17 at 11:12 am to seawolf06
I believe withdrawals of contributions are only tax free if the Roth has been around for five years. I could be wrong though lol.
Posted on 11/13/17 at 1:16 pm to McCaigBro69
quote:
Okay, so I was laid off a few months ago and have been receiving unemployment benefits in the state of Texas since then.
What kind of work do you do?
Posted on 11/13/17 at 1:31 pm to McCaigBro69
quote:
I believe withdrawals of contributions are only tax free if the Roth has been around for five years. I could be wrong though lol.
It's taxed before you put it in so withdrawing principal is a tax free transaction. I am not aware of anty time requirement for that.
Posted on 11/13/17 at 2:53 pm to CoachChappy
quote:
What kind of work do you do?
I was in the media, I know, terrible field to get into lol. But after I graduated in 2013 I got a job asap and was coasting along pretty well. My last position I was the sports editor at a newspaper.
Now, I moved to Dallas to live near my girlfriend and I've been shooting out like applications like crazy over the last few months. I've had numerous interviews and on several occasions second and third interviews but I've had zero luck so far.
I'm honestly looking for anything at this point. I feel like a piece of shite sitting at home looking over job boards.
Posted on 11/13/17 at 3:45 pm to McCaigBro69
I feel for you man. I was stuck in a similar position a few years back. I ended up moving to take a job and wish I had done it sooner.
Posted on 11/13/17 at 3:55 pm to CoachChappy
Yup! Thanks for the words of encouragement. Hopefully something will happen soon!
Posted on 11/13/17 at 5:59 pm to McCaigBro69
Have you thought of online publications? Something where you can write and edit from anywhere?
Posted on 11/13/17 at 6:20 pm to CoachChappy
quote:
Have you thought of online publications? Something where you can write and edit from anywhere?
I have. The problem is finding ones that are somewhat real publications. There are a lot of those positions that are looking to hire one person to run everything w/ a very small readership and a salary of less than like $30K.
I know there isn't money to be made in this profession, but you'd probably be shocked how many of those gigs want you to work 60 or so hours a week for like $28K lol.
I'm trying to get my foot into an insurance job if possible in claims or something. I'm not dumb, I know there a lot of jobs I can do, I just may not have the work history or right degree for it. It's just a matter of someone giving me a chance w/a position that has some kind of training or small adjustment period. I'm the type of person who can learn to do something quickly, especially if I'm shown the ropes.
Posted on 11/13/17 at 7:08 pm to McCaigBro69
No advice here just wanted to say good luck and keep your chin up......better days are around the corner.
Posted on 11/13/17 at 7:41 pm to McCaigBro69
quote:
I have. The problem is finding ones that are somewhat real publications. There are a lot of those positions that are looking to hire one person to run everything w/ a very small readership and a salary of less than like $30K.
I know there isn't money to be made in this profession, but you'd probably be shocked how many of those gigs want you to work 60 or so hours a week for like $28K lol.
I'm trying to get my foot into an insurance job if possible in claims or something. I'm not dumb, I know there a lot of jobs I can do, I just may not have the work history or right degree for it. It's just a matter of someone giving me a chance w/a position that has some kind of training or small adjustment period. I'm the type of person who can learn to do something quickly, especially if I'm shown the ropes.
FWIW, my brother-in-law's brother (whatever that makes him to me?) Did journalism or communications in college, and he works for one of the ISDs in DFW. He's a comm director or something and makes a shite ton of money. May be something to look into.
Posted on 11/13/17 at 10:03 pm to Mingo Was His NameO
quote:
It's taxed before you put it in so withdrawing principal is a tax free transaction. I am not aware of anty time requirement for that.
Yep. You can withdraw the.contributions any time without penalty. And to answer the OP's question, the withdrawal of contributions is not considered to be income. It's more like withdrawing money from your savings account. I think that he's thinking of the five year rule relating to withdrawal of earnings, even if the person has reached 59 1/2. As my CPA explained it to me, the initial Roth contribution must be made at least five years before distribution of earnings or interest in order to escape penalty.
Posted on 11/15/17 at 12:36 pm to Tigers4Lyfe
Thanks Tigers. I’m trying to stay positive!
For everyone who answered, thanks for the answers. I spoke to my advisor and ya’ll were right. For whatever reason I was thinking contribution withdrawals would still be taxed, but Roth’s are FIFO.
For everyone who answered, thanks for the answers. I spoke to my advisor and ya’ll were right. For whatever reason I was thinking contribution withdrawals would still be taxed, but Roth’s are FIFO.
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