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Question

Submitted 71 days ago...

Raucously346

New User (1)

Early Roth Ira Withdrawal

I purchased a roth ira in 2006. It is now worth only 85% of the original purchase price. Can I withdraw the remaining principal without penalty although I am less than 59-1/2?

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Answer 1 / 1 - Submitted 70 days ago...

Reader

Expert (713)

If this is your only Roth IRA, then yes, you can close it out without penalty. The rules for Roth distributions presume that you are taking out your own contributions (which are after-tax money) first. In your case, the whole account is less than the contributions, so no tax, no penalty.

If you have more than one Roth account, and one has lost more money than the rest & you wish to close it (but not the others), then things are a bit more complicated. You might want to look at a Form 8606 (available on www.irs.gov ) to see what happens there, and talk to a tax preparer about your specific situation.

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