Roth IRA early withdrawal

[Alex The Great]

I do have Roth IRA opened in April 2017 (more than 5 years ago) and contributed into it each year. At the beginning, I contributed through ordinary Backdoor Roth (first couple of years) and later through Mega Backdoor Roth once my company allowed it (which means money were converted from after tax 401K).
Currently I'm 55 years old. I do have some dividends being generated in Roth IRA. Now my question is: can I withdraw those dividends, without paying tax and penalty? I know I can withdraw principal any time. But who and when decide what is a principal and what are earnings? In my case, dividends are technically earnings. But I do have funds hanging there for more than 5 years. I sold some stock and bought others during these years, it is hard to track where they are. Do I need to sell funds, in order to qualify for tax and penalty free withdrawal? It would be nice if someone can advise on it.

 

[corn18]

You decide what is principal and what is earnings. If you did a backdoor Roth in 2017 for $5000 and your Roth balance is now $6000, you can withdraw $5000 without penalty or taxes. The IRS doesn't care what constitutes that $5000. Did you file a form 8606 when you did the backdoor Roth?

Here are the withdrawal rules:

ORDER OF DISTRIBUTIONS
Regular contributions
Taxable portion of first conversion
Nontaxable portion of first conversion
Each subsequent conversion, in order, with the taxable portion coming out first for each conversion
Earnings (any increase in value occurring inside the Roth IRA)

TAXES AND PENALTIES

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
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[Alex The Great]

corn18, thanks for the info. Yes I filed the form 8606 since I initially contributed into tIRA. This is what I thought: as long as amount to withdraw is less than amount of principal contributed it can be withdrawn tax and penalty free. Otherwise, it is hard to track what are the actual earnings after all these years.