Hi. Can anyone tell me about penalties and taxes due on a withdrawl from a ROTH IRA at age 58? Account has been open since 1998 when it was rolled over from a 401k and taxes paid on the rollover. Is it just earnings that are taxable? Must you be 59 1/2 to avoid a penalty? Can't seem to get a straight answer to these questions. Don't want to withdraw the entire sum, just need some money to make home repairs. I know all my contributions have been after taxes, but can I withdraw without penalty at age 58? One person tells me that I can withdraw any amount that is not earnings, another person says that withdrawals before age 59 1/2 cause a penalty. Would appreciate any thoughts from someone who knows or can direct me toward the answer. Thank You. Dave.

Dave231:

It is my understanding that, after the 5-year waiting period (which, based on your input, has passed), you can withdraw whatever amount you want without penalty.

Several of my clients have made such withdrawals with no challenge from the IRS.

Thank you Atlanta. I appreciate your time and expertise. You've helped me a lot in the past year or so and it's good to know that you're here. Many times I think that I know the answer to tax questions but just need to be assured because of fear of making mistakes. Thanks again. DAVE231.

Glad to help!

I would like to get a simple calculation. IRS rules are hard to decipher!
1) I am 64, married.
2) I am still full time employed. My income is around $86,000 +/- $1,000.
3) My wife has retired and gets from SS $518 a month.
4) I have a pension plan with the company. I also contribute 3%from my salary to a supplementary pension, through company's pension plan.
5) I have 401K with the company, where I contribute 6% from my salary. No matching contribution.
6) We filled a joint return every year.
7) No other income in the family, no other dependents.

Can I open a Roth IRA account? If yes, what is the maximum contribution for year 2005? What would be for year 2006?

Adriana:

Yes, you can open an Roth IRA for both yourself and your wife. Your combined income is well below the amount which prevents Roth IRA contributions.

For 2005, you can contribute $4,500 for each, for a total of $9,000. I believe it is the same for 2006, but I would have to check to be sure. In 2007, it will go up to $5,500 each, for a total of $11,000.

You can contribute to Roth IRAs for each of you as long as you have earned income at least as much as the contribution. There is no age limit for a Roth IRA.

Thank you.
I hope that this example may help other people to understand the limits for a Roth IRA.

To Whom It May Concern:

The $4,500 annual limit on Roth IRA for Adriana was because both he and his spouse are over age 50.

For those under 50, the limit is $4,000.