First, a quick refresher on the rules: If you withdraw an amount equal to the size of your Roth IRA contribution, the amount will be tax- and penalty-free. If your initial contribution accrued earnings while in the Roth IRA and you withdraw them too, the earnings will be subject to income tax. Furthermore, if you are under age 59½, that withdrawal will be subject to an early distribution penalty as well, unless you meet an exception to the penalty. Both the tax and the penalty apply because your distribution is not a qualified distribution. (See also Are there tax penalties for closing my IRA account?)
Now, as to your situation: Yes, as a painless alternative to withdrawing the amount, you may consider transferring the balance to a new financial institution and establishing a new Roth IRA there. A transfer is a tax-free movement of assets between retirement plans. Your new financial institution will be able to assist you with the necessary paperwork to effect this transfer. Additionally, you could request a distribution of the assets and make a rollover contribution to your new Roth IRA within 60 days after your receive the distribution. A rollover is also a tax-free movement of assets between retirement plans.
Please bear in mind that you must meet certain income requirements in order to make a Roth IRA contribution. For 2018 they are as follows:
You are able to contribute 100% of compensation up to $5,500 ($6,500 if you are at least age 50 by the end of the year for which you are making the contribution) your modified adjusted gross income cannot exceed:
- $135,000 if you are single (the $5,500 limit is reduced if you earn between $120,000 and $135,000)
- $199,000 if you are married filing jointly (the $5,500 limit is reduced if you earn between $189,000 and $199,000)
- $10,000 if you are married filing separately (the $5,500 limit is reduced if you earn between $0 and $10,000)