Here’s a summary of the main problem reported by the user and the solutions discussed:
- Main Problem: The user wants to know if they can withdraw a $6,000 contribution made to a Roth IRA two years ago without incurring taxes or penalties, especially since they have not made any profits.
- Solution: Roth IRA contributions can be withdrawn at any time without tax or penalty, regardless of age or holding period.
- Advice: The user should keep track of their withdrawals against contributions, as Fidelity does not monitor this.
- Withdrawal Order: The IRS mandates that withdrawals are taken in the following order: first from regular contributions (tax-free), then conversion contributions (FIFO basis), and finally from earnings (which may be taxable).
- Qualified Withdrawals: If the user exceeds their contributions and accesses conversion or earnings, these may incur taxes and penalties unless certain conditions are met, such as being over 59.5 years old or using the funds for qualified first-time homebuyer expenses.
Cupine
06/02/2023 at 12:56:29 PDT
Could i take out my 6k contribution i make 2 years ago without being taxed or penalized. I havent made any profits.
FidelityMarian
06/02/2023 at 14:09:44 PDT
Thanks for reaching out to us, @Cupine!
Roth IRA contributions can be withdrawn from a Roth IRA at any point without tax or penalty, regardless of your age or holding period. Fidelity does not track your withdrawals against your contributions, so make sure you are keeping track of that.
The IRS mandates that Roth IRA distributions be taken in this order:
First, from regular contributions, not subject to tax or penalties
Second, from conversion contributions, on a first-in, first-out(FIFO) basis
Last, from earnings, generally taxable as ordinary income
If you exceed your contributions and dip into your conversion or earnings, they can be subject to tax and penalty if not qualified. Withdrawals may be qualified if the taxpayer meets the five-year aging period and one of these conditions is met:
Owner is at least 59.5.
Distribution is to a beneficiary due to the death of the owner.
Owner is disabled, as defined by the IRS.
Distribution is for qualified first-time homebuyer expenses (up to a $ 10,000-lifetime limit).