Roth IRA - early withdrawal rules.
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- Опубликовано: 5 сен 2024
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I’m taking mine out solely for the purpose of getting a first home. So I’m glad you covered that
buy crypto instead
@@b_reel Good one
Quick question/note: You said that we have to wait 5 years after opening the account to be able to take out contributions, but contributions can actually be taken out at any time. I see a lot of questions here around this rule, but please explain it in the description or something because it was not accurate in the video... You do not have to wait 5 years unless it is a rollover into a Roth or any money that gets put into a roth that has not been taxed yet. But if you contribute your money that has already been taxed (like your income), then you can take it out at any point penalty free without this 5 year waiting period. I know you answered someone's question correctly here in the comments, but in the video you are making it sound like you have to wait 5 years even to take out contributions penalty free. Otherwise, great informative video.
Thank you for clearing this up. I’m currently in the position where I have some unexpected bills that need to be paid and the only money I have to pay them is my contributions to the Roth. Which I opened last year.
Video did make it seem like you have to wait 5 years to pull out contributions, I agree.
Thank u! Just opened an ira with vanguard last month
thanks so much! just checked and i first opened my Roth IRA in dec 2011...
Thanks for watching!
Hey, I’d like to know how much growth you’ve experienced since then!
@@vexxkl6558 2 inches
so helpful i was just wondering which was better so i could have some type of freedom with my money instead of it being tied up until 2053
Thank you. This is by far the most informative video!
Just found this channel and am really enjoying getting educated.
I've had a Roth IRA account for over 5 years. Each year I put in different amounts of $ (I try to max it out each year but that doesn't always work out). Every few months I put however much $ I have in there into a cd, usually a 5-yr cd since those tend to have the best interest rates. I am 53 years old and this past December one of the 5-yr cds matured. Instead of renewing it, I took out ONLY the contribution part of the cd. The interest/earnings I put into a 5-yr cd. Now that it's 2018 and I'm having my 2017 taxes done by H&R Block, they're saying I owe a 10% penalty because I w/drew $ early. I didn't but the paperwork I got from my credit union has a code "J" on it and instead of a "Q" (my husband who's over 59 1/2 also w/drew $ from one of his 5-yr Roth IRA cds that matured at the end of 2017). Everywhere online I read that it's ok to take out ONLY your contributions when it comes to Roth IRAs as long as you don't touch the interest/earnings if you're under 59 1/2 but now that I've done it, it's not working out! How do I get this fixed? The person at H&R Block has tried different things w/their software program but it keeps calculating that we owe tax on my contribution withdrawal. It's a difference of $1000 in our refund! Any ideas? I'm going to check w/our credit union tomorrow to see if they'll reissue the paperwork with a "Q" instead of a "J," but since I'm not over 59 1/2, doubt they'll do that. How does someone who's UNDER 59 1/2 and w/draws or takes out only their contribution portion of a Roth IRA cd that's over 5 years old do it without tax repercussions? What form do they need from their bank/credit union?
+Priscilla Arsenault yes you should get that fixed and keep all your records. You may want to use a CPA rather than hr block.
excellent video, thanks man. best explanation of roth ira i've seen.
I'm going to contribute for 20 years. Maxed out roth ira and twice as much to a taxable account. At the end of 20 years I'm going to take out the entire contributions (to the roth ira) and retire.
Thanks for breaking it down in dummy terms:} liked and subscribed!
I have listened to so many of these video and not one address this exemption on IRS form 5329-12 Distributions incorrectly indicated as early distributions by code 1, J, or S in box 7 of Form 1099-R. Include on line 2 the amount you received when you were age 591/2 or older. Can you explain why this is not talked about, I was almost charged this penalty until I personally called the IRS and spoke to them concerning this penalty and they told me about this form and the 8606. I then sent this to my pro and now I don't have to pay this tax.. WOW...
Nice video!!What exactly should a roth ira consist of? Stocks bonds and money that is not invested in the stock market? Where does the money that you put in your roth ira go, like what is it invested in? Do you mind doing a video on the components of a roth ira like what exactly makes one up.
jewel thompson thanks for the compliment! You can invest in almost anything you like or have someone like JazzWealth do it for you. There are few limitations. Thanks for watching!
Thank you so much for this explanation!!!
Very clear. Thank you 😊
Galsenprez 221 you're very welcome and thanks for watching!
Dec 22 here !!!
Strange, I want to cash my Roth IRA and I have no surrender fee. I can simply get cash value at this point. My earning were at the level of... 1.5% a year. So, NOTHING.
If I opened the account in 2019 but made contributions for the 2018 year also, will 2018 be the start of the 5 year rule?
I took money out of ROTH after five years and no more than contribution amount due to financial hardship but IRS came after me(I had to use a credit card to pay them). Is there a way to recoup that money?
Thank you
Super helpful and fast!
I find it amusing how some of your vids have a scowl and some have a smile.
but whats the actual proccess of withrdrawing it? do you have to have a real reason and option given by them to select like it is with the 401k?
How would "they" know u took it out early and where do we pay the penalty? During filing our income tax? And u forgot to talk about terminal illness!
beautiful video
Great info.
Thanks for the information
Thank you for the the clarification Jazz. I pulled out a portion of what I contributed to my Roth this year, but did not touch any earnings. Will I need to include this on my taxes this year? Is so, where on my 1040 would I present this information? Or is it a completely separate form that needs to be attached to my 1040. Thank you in advance for your time.
converyds if there is any reportable withdrawal the brokerage firm will kick out a form to you to use on your taxes. Thanks for watching!
Are you able to withdraw your initial contribution within the first year of opening or does the 5 year apply to that?
^
Where does the 10% fee come from? And is that 10% fee just on the earnings? How is the fee calculated? What about transferring from an old roth to a new roth? Pretty sure I read that's tax free to switch companies, but does it need to be a direct transfer? Hard to get clear details.
Great content, man. One question: could I pull from my ROTH IRA in order to start a business?
Helpful thank you 🙏
The video was excellent and clear thank you! I have learned a huge amount from your channel recently. I have a few related quick yes no questions. I'm sure you are busy, but if you responded that would be terrific! =) Is the 5 year timer a one time thing starting with the first year of funding? In other words does each contribution have its own 5 year timer? Does the 5 year rule apply to rollover conversions into the Roth IRA in the same way as contributions? If the conversion is from an after tax non-Roth 401k account or or an after tax Roth i401k, is that OK? If the just mentioned conversion's value is let's say $57,000 in 2019, is that OK?
Same question! Would love help on that!
There is an original 5 year rule. You have to wait 5 years from when you first opened a Roth. Once any Roth is opened, each conversion also has it own 5 year rule. For example, you opened a Roth in 2010, have a satisfied the first 5 year. If you did a conversion in 2011, you could take the conversion and the gains (assuming you are older than 59 1/2). If you then did another conversion in 2020, the money you converted can be pulled out at any time but the gains can no be pulled out until 2025.
Ironically I need to take mine out early because I’m a jazz musician. Can I take out the principal with no penalties at all? I met the 5 year period
I love your Jazz intro
I am still confused. You started with no penalty or fee as it is after tax. Then you brought up 5 year topic. What am I missing? Are you saying after 5 years earnings also tax and penalty free? And after "1 day" contribution anyways tax and penalty free?
I have both the traditional and Roth just opened last month after I lost my job my question is how often can you move funds from the traditional into the Roth? I can’t seem to have someone explain this where I can understand it sorry a dummy here too 😢. I live in clermont and come down to st pete once a month to visit family I may just drop in to ask questions thanks for the info
So would I face taxes and/or fees if I withdraw earnings pre 59 1/2 and post 5-year old IRA account?
Does the housing exception apply to buying your first home if it's overseas?
So on a video called "EARLY WITHDRAWL PENALTIES" you never actually said what the "EARLY WITHDRAWL PENALTIES" are. I knew after the first minute you were not going to tell. UNBELIEVABLE.
What about the 59 1/2 rule ?
Great video!
Thanks!
Good info
What about withdrawing to buy a plot of land?
So let's say I have put $6000 into a Roth IRA. Only one year later, total account balance in now $7000. Am I able to withdrawal the $6000 tax and penalty free?
I believe so. Only the contributions
What about down payment for a 2nd home?
If I take money out can I return it later?
do you have the branch in WA state?
@Hannah Shile got paid? what do you mean?
Clarification: do you have to also be over 59 years old to not incur in fees/penalties? Also: what happens to your Roth IRA account if you have to move to a different country? I'm a green card holder and though I'm planning to live in the USA long term, there's always a small possibility I might need to relocate back to Italy at some point in 10 years, or 20 years (you just never know what could happen with family's health and such). I guess I'm just afraid of committing to something longterm that might involve fees/penalties as life is unpredictable, but I also don't want to find myself with no retirement because I hesitate too much
I opened a ROTH IRA back in January of 2015. I want to close it because I'm out of work and really need the money. I'm not buying a house or paying for college. I'm 42 years old and need to pay my bills. What are the penalties and taxes?
you will be able to withdrawal all your contributions but any gains you will be penalized and whatever is left over will be added to your income for the year which may not be such a bad thing since you said you are currently unemployed. Whomever currently holds your account will handle the penalty payment then you will get a tax form from them at the end of the year for you to add on your taxes. Im guessing since you just opened it the taxes will be very little. Best of luck and thanks for watching!
Hey, did you ever find the answer to this question? Thanks
If you take out contributions for a first home/college, does it also have to be 5 years old?
Say I contribute 5500 in January, then take out the cash for an emergency in February. In May my situation is stable. Can I contribute the 5500 again to my account?
Say then I withdraw 20,000 of contribution money in January instead of 5500. Can I replace all of that in May or am I limited to 11,000? (5500 this year and 5500 late contribution from the previous year)
The 5500 is the limit for this year. Despite what you withdraw you can only add 5500 ;)
@@Jazzwealth.... that's such a BS rule.... if you're in a pinch you should be able to withdraw the money and then deposit it back later when you're out of a pinch..
@@dacokc For CARES ACT emergency I think maybe this rule changed.
@@dacokc thank our awesome government
to clarify, in order to withdraw from Roth IRA for down payment on home you still have to wait 5 years since opening the account?
Soo after the five year mark I can sell some of my contributions and not suffer from any penalties? So basically I would just sell off the amount of shares equal to my contribution and I would be okay?
If I take money from Roth, can I put back in several month with same amount?
I opened a Roth IRA in July of this year, contributing $1,800. I'm 23 years old. I want to take all my money ($1,800) out to pay bills. E-Trade informed me that they will charge a $25 penalty for early withdrawal. What other fees will I incur? Will I face a penalty because I haven't had my account for over 5 years?
Should I talk to my accountant before taking out the money?
Thank you for your time.
Sincerely,
Lauren
lo jillo that's just a fee they feel like charging. You can take out your contributions tax free though if it's possible to find money elsewhere I would suggest leaving it in. Thanks for watching!
Hello, I have contributed more than what my current balance is due to losses in the market. Does that mean I can withdraw the full amount with no penalty? Or does my account holder call some of that “investment gains”?
Hey, did you find an answer to this?
if you role over a roth 401k to a roth IRA and wait 5 years can you take the gain from the 401k portion out if you not age 59 1/2?
If a military member had a Roth TSP for 6 years in the military, got out and rolled it into a ROTH IRA, would they have to wait an additional 5 years in order to remove their contributions penalty free?
Great question! The actual tsp rule states " if you transferred money from your Roth TSP to a Roth account maintained by another plan, the 5-year clock begins on January 1 of the year your first contribution was made to your TSP Roth balance ..."
Be sure to keep every record of your transactions and thanks for watching!!
Jazz Wealth Managers thanks 👍. Great videos BTW
I’m 18 and I want to open a Roth IRA but I want to take m money out at the age of 50, I know I will get taxed 10% from the penalty but is that all what else and how much will I get taxed for , if I put 500 dollars every month in ira from age 18 to 50 it will be around 546,000$ but with the 10% penalty it will be come around 491,000 how much will I be left with if that 491 gets taxed
No penalty on your contributions so really you could take that out with no cost ;)
Hi How do I prove to the irs that I had an roth ira open for 5 year since I had one with vanguard in 2015 and now I have one with fidelity that I open in 2019? I have never filed taxes
Your IRA custodian sends you Form 5498 every year in January showing that you contributed to an IRA. Do you recall getting these forms?
@@alrocky yes I just downloaded it from my online vanguard account. It is from 2015. My concern is that since I never filled how will the irs know that I had this account open since 2015? I currently have a fidelity account that i open in 2019
@@ovie8977 Form 5498 reads: This information is being furnished to the Internal Revenue Service." So the IRS does know. What _I'm_ wondering is if you had *earned income* (a job) to *qualify* to open and fund an IRA. If married and spouse worked you are eligible for an IRA.
.
Anyway you don't need to worry about proving to the IRA when you contributed to your IRAs.
Great video :) So if I open a Roth IRA today at 26, and I want to save/invest in it for 2 years until I can make a downpayment on my first home property, then will this violate the IRS's 5-year rule or not? To be exact, if we imagine two senarios building on my situtation, the first where I only withdrew my earnings and the second where I only withdrew my contributions, would I be penalized and taxed for either?
Contributions can be withdrawn anytime. Earnings get the penalties
Thanks :D
Is roth in a defer comp 457 the same as an ira roth? And if i was to take out the entire sum of my account (15k) for a down payment on a house before 5 years, u r saying i would only have to pay taxes in wat ever of that 15k is profit and face no penalties?
So in other words if i contributed 5k n profit 10k totalling 15k, only the 10k would be taxed?
And once i completely empty out my account will it discontinue and will i be penalized if its for the sake of a home down payment?
Can you take out some of it and not all?
jewel thompson you are free to take your contributions out as you please.
hi...i opened $5500 of my roth 2017...it has earned $700 now...i want to take $2500 this july...will i be taxed and or penalized?
You should be fine though your brokerage may charge you withdrawal fees. Check with them.
So im 23, lets say I open a Roth IRA today and put 3,000 in, and contribute 3,000 each year, do I get some sort of % return? or is that only if I buy mutual funds and rtfs etc..?
You do NOT have to buy funds or etfs to earn intrest on the the account. Once you place funds in the roth ira account you are purchasing holds of the money market fund. In other words you are purchasing vanguard funds when you dwposit to your roth ira.
@@richmayor4027 so I didn’t have to buy stocks and ETFs in my vanguard account for my Roth IRA I really didn’t know that what interest will it draw
@@letthetruthbetold5602 it will accrue interest but very little interest. Stocks and etfs will gain higher interest rates and also grow in price at the same time.
I'm taking money out of vanguard because their fossil fuel investments.
I once had a Traditional 401(k) at work (I cashed out :/) and I was able take out a loan on it. Is that an option for a Roth IRA?
Your contributions may be withdrawn at anytime so there is no need for a loan.
So I open my Roth IRA March of 2017, so in January 2021 it should be 5 years correct? Anyone?
January 2022 (not 2021) is 5 years after January 2017 (the start of the calendar year it opened)
Thank you
Thank you