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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121585  
Subject: Re: A Question on Roth IRA Redux - Part III Date: 12/16/1998 10:01 PM
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[[Hello TMF Taxes!]]

Yo!! Nelson!!!

[[ Here's my situation: I'm a 29-year old single male]]

Sweet fancy Jesus!!! I envy you already. But let's move on....

[[and I opened a new Roth IRA in 1998 that
contains $2000 in contributions and about $500 in earnings. Is it true that I may withdraw the
$2000 contributions at ANY time without penalty or taxes?]]

Yup. I don't know exactly how your Roth IRA got to this place, though. Your contribution (I assume) was $2k originally. So if the current value is now $2k, it really contains your original contributions. Any other gains or losses would really offset one another.

So I'm still not clear how you can make a $2k contribution, and now the FMV of the Roth IRA is $2k, but you say that it contains $500 of earnings. It would seem to me that the Roth IRA would contain your original $2k contribution. Nothing more. Nothing less.

But...that aside, you are correct. You can remove your $2k at any time, without taxes or penalties. You are doing nothing more than removing your original contribution, for which you received no tax benefit in the first place.

[[ The five tax year period and the four classifications of a "qualified" distribution that you list do not
apply in this case because I'm only taking out the Roth IRA contributions, correct?]]

Correctamundo...

[[ Thanks,]]

You are very welcome...

TMF Taxes
Roy

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