SEPP for roth IRA vs. traditional IRA

[bikebum]

Hi investment wizards,

As I understand, you can avoid the 10% early withdrawal penalty from IRAs by using SEPP, but the payments are still subject to income tax. If a person plans to use SEPP as part of an early retirement plan, would they want to invest in a traditional, rather than roth, IRA? It seems if you do this with a roth you pay double income tax, once when you make the contributions and again on your SEPP. With a traditional you would only pay income tax on the SEPP. Am I missing something?

Other info about roth vs. traditional IRAs is welcome.

[Undecided]

Hi investment wizards,

As I understand, you can avoid the 10% early withdrawal penalty from IRAs by using SEPP, but the payments are still subject to income tax. If a person plans to use SEPP as part of an early retirement plan, would they want to invest in a traditional, rather than roth, IRA? It seems if you do this with a roth you pay double income tax, once when you make the contributions and again on your SEPP. With a traditional you would only pay income tax on the SEPP. Am I missing something?

Other info about roth vs. traditional IRAs is welcome.

The 10% early withdrawal penalty is only applicable to earnings and conversions made in the prior 5 years, so you can always withdraw them without needing to take SEPP to do it. You could take out earnings from a Roth using SEPP, but you're right that the earnings would then be taxable (assuming you're not 59.5 or older (or you are, but the Roth hasn't been funded for at least five years)).