Is it possible to use Roth IRA to pay mortgage or paying off mortgage

[VAer]

Just making an example, if someone does well on Roth IRA and there is quite some money on Roth IRA, is it possible to find a way to spend some money without penalty? Like paying off mortgage for first house?

I heard that qualified exception is first time home purchase. Not sure what other exceptions (without 10% penalty) for early withdraw.

Thanks.

By the way, I mean early withdraw 

[Critter-3]

Your contributions to the ROTH can always be taken tax and penalty free.  If you have the ROTH open for 5 years or more AND you are over the age of 59.5  then you can invade the earnings as well tax & penalty free for any reason.  

[VAer]

Of course I meant early withdraw. When I say penalty, that is early withdraw penalty. 

[Critter-3]

If you take an early withdrawal you will pay a penalty and taxes no matter what you did with the money.  

[fanfare]

10% penalty is less than 20% Capital Gains.

If you did not go to Cash recently your Roth IRA is dropping in value as we speak.

[Hal_Al]

The home buyer exception to the 10% penalty, on early withdrawals, does not apply to paying down a mortgage. 

As others have said, you are allowed to withdraw the contributions (what you put in) portion of your Roth IRA, at any time without tax or penalty. If you withdraw any of the earnings portion, before age 59.5, that will be subject to tax and the 10% penalty. 

The are additional rules on withdrawing money that was  converted to a Roth IRA. See https://www.investopedia.com/ask/answers/05/waitingperiodroth.asp#:~:text=You%20can%20always%20withd....

[leeloo]

There is always a possibility that some other exception may apply. https://www.investopedia.com/articles/retirement/02/111202.asp

[Opus 17]

---

@VAer wrote:

Of course I meant early withdraw. When I say penalty, that is early withdraw penalty. 

---

Your withdrawals are always taken out in the order contributions first, rollovers second, and earnings last.  You can't withdraw earnings only, unless you already withdrew all your contributions and rollovers.

You never pay tax on withdrawals of contributions.  Withdrawing rollovers can sometimes result in a 10% early withdrawal penalty if you are under age 59-1/2 AND the rollover was less than 5 years previous.  Withdrawing earnings is subject to income tax PLUS a 10% penalty if you are under age 59-1/2.

The list of allowable exceptions to the 10% penalty is here, but if you are withdrawing earnings, you will still pay regular income tax.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

[Opus 17]

---

@fanfare wrote:

10% penalty is less than 20% Capital Gains.

If you did not go to Cash recently your Roth IRA is dropping in value as we speak.

---

Withdrawals of earnings before age 59-1/2 are subject to the 10% penalty PLUS regular income tax. (32% effective rate or higher plus state income tax.)