Ways To Avoid Penalties On Your Roth IRA
Here are some things you need to know if you plan on withdrawing money from your Roth IRA. You may incur early withdrawal fees on your Roth IRA. There are some ways you can avoid these penalties.
- If the Roth IRA account holder becomes permanently disabled, you can withdraw the funds without penalty.
- If the event of the account holders death, his or her estate will not have to worry about penalties for early withdrawal.
- If the Roth IRA account holder is seriously injured or ill, and prolonged medical care is needed, the early withdrawal penalty is waived. The medical expenses have to be more than 7.5% of the account holders annual gross income.
- If you are purchasing your first home, you can withdraw $10,000 from your Roth IRA without penalty. Remember this is a lifetime limit.
- If you have any urgent educational costs for you, your spouse, children or grandchildren, you can safely withdraw from your IRA. You will still be required to pay taxes on these withdrawals.
- If the IRS has placed a levy on your wages to pay back taxes, you can use your IRA to withdraw money and settle your tax debt.
- If you have been unemployed for more than 12 weeks and you need money to pay your medical insurance premium, you can use your IRA to help make the payments.
These withdrawal exceptions are very specific, and can only be used in case of emergencies. It is good to have a Roth IRA in case the unexpected happens. The money is meant for retirement, but we can not predict when an emergency may hit.