This is a question splitting off of a thread on the Anti-Mustachian sub-forum about John Oliver's retirement plans video. Basically, before I knew better, I invested $5500 in an employer-sponsored Roth IRA with a "financial advisor" at a 1.25% fee. After two years, that Roth IRA is worth $5355. I want to rollover this IRA to the other Roth IRA I own -- the one that's actually making money for me -- with Vanguard. Vanguard requires a medallion signature guarantee, but the "financial advisor" is refusing to give me one (Well actually they did give me one but did not date it, so Vanguard rejected it and then when I tried to get another one, they bitched and moaned about it and then signed the wrong section of the paperwork, then refused to fix the error.) I also have accounts with Bank of America, but they are refusing to give me a medallion signature guarantee unless I transfer the Roth IRA to their equally high-fee Merrill Edge service, and with my local credit union who do not offer medallion signature guarantees.
At this point, I'm looking for another way to transfer this.
1.) I originally got a Roth IRA instead of a Traditional IRA in the hopes that if necessary I could withdraw my contributions tax-free since I already paid taxes on it. Since the full amount in the Roth IRA is less than my contributions, I thought I could simply take a full distribution and be done with them. Now I have people telling me that I will still have to pay 10% taxes on post-tax contributions. At the same time, the IRS website seems to be telling me that I am in fact correct that I can take a tax-free distribution of my post-tax contributions. Can anybody tell me which is correct? (
https://www.irs.gov/uac/newsroom/tax-rules-on-early-withdrawals-from-retirement-plans)
2.) According to the IRS website, I may also be able to take a full distribution of my Roth IRA with the 10% taxes taken out (if it's really subject to that) and then simply contribute the 10% out-of-pocket with the rollover and then reclaim the withheld taxes on my 2016 tax return. Am I reading this correctly or do I have this wrong? How would I even reclaim those on my taxes? (
https://www.irs.gov/uac/newsroom/tax-rules-on-early-withdrawals-from-retirement-plans)
Any tax experts/Roth IRA experts out there who can give me some advice on this?