ROTH I.R.A. early withdrawal penalty questions, suggestions, experiences requested.

[r8a2y3]

I would really appreaciate any experiences and suggestions concerning the early withdrawal penalty from a ROTH I.R.A..

I have a ROTH I.R.A. that is worth about $11,500.00.

I really need the money to help pay for my monthly mortgage payments. I am afraid that my banking account may slightly not cover my mortgage payment next month, and definitely the month after that.

I've never been late before paying for my mortgage, and I am not going to start now.

I also pay off my credit card every month.

I have just run into problems working fewer hours the past seven months because of personal health reasons.

I understand that there is at least a 10 % penalty.

And there is an additional I.R.S. TAX penalty.

Has anyone ever had to take an early withdrawal from their ROTH I.R.A.?

By the way, I have already cut my paycheck savings on my 403-B at work from 21 % to 4 % to help with finances. My office matches up to 4 %. I have also cut down on eating out, driving, etc..

I must admit that I wish that I didn't have to waste these savings by early withdrawal. And that I am worrying a bit too much about doing this. I have already stopped the monthly $200.00 contributions to the ROTH I.R.A..

I apologize in advance if I have to bump this thread up several times, but I really would like to hear your experiences, mistakes, and suggestions.

I just want to complete this task the correct way, and try not to lose any more money in this process as necessary.

Thank you in advance everyone.

 

[gina2000]

Why don't you contact the bank or mortgage company that holds your loan. Sometimes things can be worked out so that you won't have to break the IRA with all the tax consequences. It's worth the phone call.

 

[shelbyjosh]

We have never withdrew money from DH Roth. Before doing this, I would exhaust all other methods possible...except credit cards. Do you have a home equity line of credit? You can write checks and then just pay the interest payment only. Plus, the interest you pay is tax deductible. Ours requires checks to be written over $100. We have used ours to get the electrical re-done. I think this month's payment was $6. You may want to check this out before taking $$ out of your Roth. If you still are unclear about what to do, call your investor or a financial planner. I am sure if you anonamously call a AG Edwards or Merrill Lynch office.

 

[Toby'sFriend]

Roth IRA penalties are different from Traditional IRA funds. The money you contribute has already been taxed once. You are allowed to withdraw contributions tax free and penalty free. Earnings on the funds are subject to income taxes and the 10% penalty unless they are used for one of the "approved exceptions."

I'm sure that whomever holds the ROTH account or a google search on the subject can help you out.

I'm sorry about your health problems. If this has been lasting for 7 months however, you really do need to look at a way to reduce your budget to live off your current income. You really will need that retirement money someday.

Good Luck

 

[r8a2y3]

Thank you for your responses and suggestions.

I have decided to cut back on any non essential spending, like not eating out, or ordering food deliveries, or driving, movies, or buying anything in general.

I appreciate all of your advice, but I really don't want to incurr any more debt with a home equity loan.

I thought in an emergency for the next two months to use my credit card. I think that I can build my banking account up over the next six months by cutting back on my 403-B savings at work from 21 % yo 4 %, too.

This should build up my reserve savings again.

I think that I will be alright for next month paying my mortgage. If not I will use my credit card. Then I will try to pay off my credit card it I use it.

After that, I can increase my 403-B savings back to where it was of 21% or more.

As far as the ROTH I.R.A. is concerned, I am going to stop contributing to it. The company that runs my ROTH I.R.A. have made more money than I have on fees.

Until things change, I would like to somehow manage the ROTH I.R.A. myself in a nonchargeable account, if that is possible, until I figure out if I can still contribute to it later.

I can withdraw it in 5-1/2 years if I need to do that.

I have always thought that I would work until I died. I never realistically thought that I could ever retire. I feel very, very fortunate to have a job for a fat, balding person.

I always thought that I would die at work.

Thank you again.