You can withdraw money from a traditional IRA in the year that you turn age 59 1/2, or after, and you will pay regular income tax but you will not pay the 10% penalty for early withdrawal.
Roth IRA‘s are a bit more complicated. Withdrawals from IRAs are broken up by contributions, conversions, and earnings. You are always deemed to withdraw contributions first, conversions second, and earnings last.
- First, you can withdraw your contributions at any time without income tax or penalty.
- Second, if part of the balance of your Roth IRA is from a conversion from a traditional IRA, you may withdraw that at any time without paying additional income tax, but you will pay 10% penalty if you are under age 59 1/2 and if the conversion was done less than five years ago. If the conversion was more than five years previous, you are exempt from the 10% penalty even if you are under age 59 1/2.
- Third, if you withdraw earnings from your Roth IRA, they will be subject to regular income tax plus a 10% penalty if you are under age 59 1/2. If you are over age 59 1/2, you will not be charged the 10% penalty, but you will still pay income tax on the earnings if you opened the Roth IRA less than five years previous.
