You can withdraw cash from your IRA at any time, however there are in some cases penalties or earnings tax associated. The guidelines differ depending on whether you have a Roth or a conventional Individual Retirement Account and, just like a 401(k), the “magic” age is 59 1/2.
If you have a Roth Individual Retirement Account, your contributions are made with after-tax dollars. This means that withdrawals are not subject to income tax, no matter how old you are when you make a withdrawal. Charges, though, are a different story. As soon as you reach age 59 1/2, all of your withdrawals are tax- and penalty-free. If you’re under 59 1/2, you can withdraw loan that you’ve in fact contributed without paying a charge. If you withdraw profits on your contributions, or cash converted from a traditional Individual Retirement Account, however, you’ll have to pay a 10% charge.
Because standard Individual Retirement Account’s are funded with pre-tax dollars, the guidelines for withdrawals are a little more rigorous. Just like a Roth, as long as you’re 59 1/2, you can make withdrawals without paying a charge, although you’ll pay income tax. If you’re under 59 1/2, though, you’ll wish to reconsider before withdrawing funds– any amount you withdraw undergoes a 10% charge, plus the routine income tax.
There are some exceptions that enable you to take a withdrawal if you’re under age 59 1/2 without paying a charge. These include:
u2022 Paying qualified college expenditures for you, your children or grandchildren.
But beware, these exceptions are subject to stringent rules. If you’re under 59 1/2, make certain to get suggestions prior to you take a withdrawal from your IRA.