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ROTH Withdrawal - where to find "plain explanation"?
Old 06-15-2011, 01:29 PM   #1
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ROTH Withdrawal - where to find "plain explanation"?

Hey everyone,

Is there any place to go and get "plain English" explanations about how to handle withdrawals from a ROTH?

Is it just a simple situation that you can withdraw ALL contents of the account if you meet the age requirement?

And are there complications if the person doing the withdrawal isn't the actual owner of the ROTH account but they do have a Financial POA?

Thanks for any input.
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Old 06-15-2011, 01:37 PM   #2
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The best starting place would be the custodian (bank or brokerage) where the account is held. There are things like 5 year holding periods and you'll need to probably use the bank's own POA form (or wait for a week or more while their legal dept reviews yours) and perhaps other considerations (like are investments liquid, etc).
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Old 06-15-2011, 03:10 PM   #3
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Quote:
Originally Posted by frances View Post
Hey everyone,
Is it just a simple situation that you can withdraw ALL contents of the account if you meet the age requirement?
Age requirement and 5 years of investment is the rule . Note that penalties (if any) are only levied on investment gains - not on the principal.

For your info, here are 3 plain english sitres that explain withdrawals...

Fool.com: All About IRAs - The Roth IRA Withdrawals

Withdrawal Rules: Roth IRAs

Roth IRA Withdrawal Rules
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Old 06-15-2011, 08:54 PM   #4
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see this wonderful table by KAWill from the fairmark.com site :
(after every yes or no, imagine a semicolon that is missing)
The Table asks if you are under/over age 59.5;
If you are under age 59.5, there is a 5 yr. clock for each conversion
that must be met for that withdrawal to be tax & penalty free;

Re: Roth IRA Rules - Table Approach
Posted by: KAWill (IP Logged)
Date: October 14, 2010 11:57PM


Roth IRA Distribution Table

UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD NOT MET

Contributions: Tax-No Penalty-No
Conversions: Tax-No Penalty-Yes (Taxable Portion)
Conversions: Tax-No Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes Penalty-Yes

UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD MET

Contributions: Tax-No Penalty-No
Conversions: Tax-No Penalty-No (Taxable Portion)
Conversions: Tax-No Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes Penalty-Yes

OVER AGE 59.5
LESS THAN FIVE YEARS SINCE OPENING FIRST ROTH IRA

Contributions: Tax-No Penalty-No
Conversions: Tax-No Penalty-No (Taxable Portion)
Conversions: Tax-No Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes Penalty-No

OVER AGE 59.5
FIVE YEARS OR MORE SINCE OPENING FIRST ROTH IRA

All Distributions Are Qualified

No Taxes
No Penalties

Note: The table is not applicable to timely distributions of excess contributions or return of regular contributions. Also note that contributions (but not conversions)
may be withdrawn at any time without tax or penalty. Withdrawals are considered to be contributions first, then conversions , then earnings.
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Old 06-15-2011, 11:36 PM   #5
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Quote:
Originally Posted by MasterBlaster View Post
Age requirement and 5 years of investment is the rule . Note that penalties (if any) are only levied on investment gains - not on the principal.

For your info, here are 3 plain english sitres that explain withdrawals...

Fool.com: All About IRAs - The Roth IRA Withdrawals

Withdrawal Rules: Roth IRAs

Roth IRA Withdrawal Rules
THANK YOU MasterBlaster!

I looked those links up this afternoon. They were excellent, particularly the 3rd one for me. Now I finally understand this 5 year rule thing, and treating all the Roths as one answers another question about it.
I never could find an adequate explanation before. I had thought of posting the question here many times, but I never could think up a good phrasing of it without getting tied up in an example. Now I don't have to.
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