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Subject:  Re: Roth 5-year limit Date:  6/26/1999  8:32 PM
Author:  TMFTaxes Number:  16627 of 127823

[[ I found Roy Lewis' series of Roth IRA articles extremely informative. However,
there was one tidbit of information that I couldn't find, and I scoured the articles
for it:]]

Thanks for the kind words. Much appreciated.

[[ Can you take your contributions (not earnings) from the Roth BEFORE the
expiration of the five-year holding period, and BEFORE the age of 59 1/2,
without taxes or penalty?]]

Contributions? Yes. No question. You can take your contributions out at any time, without taxes or penalties.

But the rules are completely different for amounts converted to the Roth IRA. Then there are some restrictions as to what you can do to remove the original conversion amount.

But contributions are always safe.

I couldn't believe that I overlooked this issue in my series on the Roth IRA issues. So I looked back. In Part III, you'll find the following paragraph:

"But, under the Roth IRA rules, and unlike the rules for a regular IRA, you CAN remove you principal contributions without tax or penalty. But note that I said "contributions". The rules for removing your conversion amounts are a bit different (and we'll discuss that next week). But let's go back to Example #1 above. If Bill decided to take a withdrawal of only $2,000, this withdrawal would be treated as a distribution of original contributions, and would NOT be subject to taxes or penalties. This only makes sense, since the original contributions were not deducted when they were originally made. This same rule applies to multiple Roth IRAs that do NOT contain conversions. Roth IRAs that contain both conversions and regular contributions fall under a completely different set of rules which may require the payment of penalties on the "early" withdrawal of conversion amounts. We'll discuss those rules in detail next week."

So it was in there, but perhaps not pointed out as clearly as it could have been. But now, with this additional information, I hope that you are comfortable with my response. Sorry for the confusion.

TMF Taxes
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