Author Topic: Before retirement Roth IRA withdrawal help  (Read 1115 times)


  • 5 O'Clock Shadow
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Before retirement Roth IRA withdrawal help
« on: December 15, 2018, 04:28:56 PM »
Hi all,

I've tried googling this issue, and calling Fidelity, but I'm still unsure one where I stand, & would appreciate your advice.

Background: I'm currently age 30, in the U.S., & since 26 I've been maxing out employer match 401(k) as well as independent Roth IRA contributions. I've wanted to maximize what I have in retirement for the sake of compound interest, and have kept a pretty skimpy personal savings account (roughly $10k). This past year, unforeseen circumstances (wife got a new job & new commute) instigated us to purchase a house. I had already invested in my Roth for the year. In order to make down payment, pay closing fees, & have a few dollars to put into the new house, I needed to pull out most of this year's investment in the Roth. I know this is bad. And dumb. And exactly what I shouldn't have done. BUT, beforehand, I did some internet research & talked to a rep at Fidelity, and even though I've owned the Roth less than 5 years, I was told that becausethe withdrawal was for a first-time home purchase within the current year I wouldn't be charged a tax penalty for the withdrawal.

This is where it gets murky, from my perspective: that initial home purchase (back in July) fell through after the inspection. I've been looking like crazy, but only found a home that fit our criteria in mid November. The seller countered my initial offer, and made it a non-negotiable item that closing not be until January 11th. We want the house, and so agreed to the seller's counter.

Long story short... I've made a withdrawal on a Roth IRA that I've owned for less than 5 years. And I didn't purchase a home within that calender year. Am I going to be buggered on an early withdrawal tax penalty? If so, is there anything I can do to avoid it (IRS form to fill out)? I've tried Fidelity again, and the rep I talked to said I needed to talk to a tax professional to figure out where I stand. If MMM has the same recommendation, that's what I'll do. BUT... I'm cheap. So I thought I'd post here to ask MMM advice before going that route.

Any advice is greatly appreciated!


  • Bristles
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Re: Before retirement Roth IRA withdrawal help
« Reply #1 on: December 15, 2018, 09:11:08 PM »
First, how much have you contributed to the Roth since you opened the account.  Second, did you withdraw more than that amount?

There is no 5 year waiting period for your contributions, you can take them out anytime without penalties.

As far as a first time home purchase I have read conflicting accounts.

I just read from that you can take out gains/earnings up to $10k for a first home purchase from an account less than 5 years old penalty free, but not tax free.

However and say there will be a penalty so you will need to consult a professional who stands behind their advice to get the real answer.

At the worst you would only owe taxes and penalty on the amount you withdrew above your total contributions.


  • Senior Mustachian
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Re: Before retirement Roth IRA withdrawal help
« Reply #2 on: December 15, 2018, 09:42:36 PM »
It's not within the current year that matters, it's purchasing the home within 120 days of the Roth distribution.

See Are Distributions Taxable? and First home.

But as Rob_bob mentioned, withdrawals of the amounts you have contributed are not taxed at all, regardless.

Probably worth your time to peruse Pub. 590b (where the above links go).