Roth Ira

[Sean Crean]

I have a Roth Ira, and I was thinking of using some of my contributions for a down payment.

I know you make withdrawals if your are a first time home buyer, which I did for my Condo.

But I also understood that you could withdrawal any contributions you put in without penalties or taxes, as done of the withdrawals are earnings.

Does anyone had experience with this? or know the rules?

I try reading the governments rules but was confusing

[Sunny Burns]

The IRS website can be confusing, here is a direct statement from Vanguard that clearly lays it out. Basically yes you can withdraw contributions at anytime!

"Withdrawals of Roth IRA contributions are always both tax-free and penalty-free. But if you’re under age 59½ and your withdrawal dips into your earnings—in other words, if you withdraw more than you've contributed in total—you could be subject to both taxes and penalties on the earnings portion of the withdrawal."

More info clearly defined at this article: https://investor.vanguard.com/ira/ira-distribution-rules

Also interesting thing I found out is, if you did for some reason withdraw from your Roth-IRA, you have 60 calendar days to return the money and it will be considered an "Indirect Rollover" that will not effect your contribution limit for that year. For Example, if you withdrew $20k of your principal from your Roth-IRA for a down payment, you could potentially return that $20k by day 60, and still contribute the $5500 for that year.