You generally can make a tax-free withdrawal of contributions
if you do it before the due date for filing your tax
return for the year in which you made them.
So, yes, you are correct that withdrawing contributions from your IRA is not taxable, because your contributions are always made with after-tax dollars. However, withdrawing your earnings is different.
Earnings, in this sense, is any money you withdrew that exceeded the amount you originally contributed. In addition to the 10% penalty, you may also be subjected to pay income taxes on the withdrawal of the earnings.
For additional information go to www.irs.gov/pub590b.
