How can you borrow from a Roth IRA?

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November 2016
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You can take out the principal portion, or contributions, made to the Roth, but gains become tricky. If you take out gains under the age of 59 1/2, there will be a 10% penalty as well as tax.  If over 59 1/2, you only avoid the 10% penalty, not the tax on the gains. There are very few limited exceptions or "qualified distributions" that avoid the 10% penalty under the age of 59 1/2, but you must have had the Roth IRA for at least 5 years.

The only other options is to do a "60 day rollover" where you take the money out with the intention of putting the money back in within 60 DAYS! This is a hard number deadline and is only to be used when you believe you can put the money back within 60 days. If you don't, the rules above apply.

Hope this helps. Dan Stewart CFA®

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