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Greetings, Bryan, and welcome.

<<Hi, I was just wondering how the early withdrawal penalties are going to be applied to the new Roth Ira?? If the Roth is held for 5 years and then I take a early withdrawal will the only penalty be the 10% variety or will they tax that amount also????>>

It really depends on how much you take. The Roth IRA operates on a first-in, first-out rule for withdrawals. Therefore, the first dollars out will by your contributions. Those have already been taxed, so they come out tax and penalty free. When those dollars have all been recovered, the earnings come out. These may or may not be taxed and penalized depending on whether or not the distribuion is "qualified."

A "qualified" distribution is a withdrawal made after five years which meets one or more of the following :

1. Made after the taxpayer attains age 59½.
2. Made to a beneficiary after the taxpayer's death.
3. Made because the taxpayer is disabled.
4. Made by a first-time home buyer to acquire a principal residence (subject to a $10K limit).

If the distribution doesn't meet the above, then the earnings will be taxed and assessed the 10% early withdrawal penalty as well.

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