You can withdraw your Roth IRA contributions anytime, for any reason, without taxes or penalties. That’s because contributions are made in dollars after tax, so you’ve already paid income taxes on that money. Put simply, when you make a contribution that you withdraw, it’s as if you didn’t make the contribution in the first place. Contributions (your own and all games) and earnings are taxed at your normal income tax rate
.
The frequency of withdrawals from an IRA depends on the type of IRA you have and the purpose of the payout. This means you’re no longer eligible to contribute to your Roth IRA if you reach the top end of any income range. Neither Roth nor traditional IRAs allow you to borrow, but you can access money from an IRA over a 60-day period by doing a tax-free rollover if you deposit the money back into the same or another IRA within 60 days. In general, a qualified charitable distribution is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is 70½ years of age or older and paid directly by the
IRA to a qualifying charity.
This type of IRA also has contribution limits (see the information on the IRA limit for spouses by Kay Bailey Hutchison in IRS publication 590). For example, withdrawals from traditional IRAs are taxed as normal income in the year they’re made, while Roth IRA withdrawals are tax-free if the account has been open for five years or more. In addition, the maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA can be reduced depending on income. The Roth IRA rules state that five years must have passed since the tax year of your first Roth IRA contribution before you can withdraw the income in the account
tax-free.
The only divorce-related exception to IRAs is that you transfer your interest in the IRA to a spouse or former spouse and the transfer is made under a divorce or separation certificate (see IRC Section 408 (d) (). In some cases, you can contribute to an IRA through your employer by taking advantage of an IRA provision, which is considered a fringe benefit. You don’t pay tax on withdrawals from an inherited Roth IRA if the original account holder held the IRA for at least 5 years. If you’re interested in investing your IRA dollars in alternative investments, such as real estate or private placements, there’s another way to invest
self-directed IRAs.