The financial climate of the past few years have put some of us in a monetary tailspin at times, and the thought of using their Roth IRA early in it’s growth has been a distinct temptation. You can of course take distributions from the account as long you do not touch the gains or profit part of the account. If you need all of it prior to the age of fifty nine and one half years then be prepared to pay a stiff penalty of ten percent, and all taxes owed on the profits. Depending on the type of account there are exceptions to the rules for early withdrawals, more so on a Roth type account than a standard IRA plan.
The reason for the high rate for early withdrawal of profits on the account is to discourage you from using the money until it is fully vested, and hopefully can support you during your retirement or “golden years”, of life in general. It takes a long time to build up the capital in an IRA fund to help you realize higher gains, and by scuttling the account for various personal reasons, be it for emergencies or personal reasons totally defeats the purpose of it’s existence.
There are situations that arise in a family, that require immediate financial attention such a major medical issues, and certainly if you run out of money due to having been laid, then the solutions become less forth coming and is just a plain necessity. There are always alternatives other than making early distributions from your Roth plan, and they should all be exhausted prior to draining your nest egg account in this manner. By all means try to get low interest loans against your vehicle, home, or even personal signature type loans if you can before even taking into consideration of assaulting your retirement plan.
It can years to build the fund back up to where it is currently, and think of all the lost profits from not having that capital in place now and in the near future. Retirement plans run on a financial snowball effect, where the interest is re-invested with the contributions. As both mature the growth becomes exponential so by the age of retirement you will not have to put on that blue vest and say to every passerby “Hello and welcome to Wally World”, as this was not a part of your plan for old age, nor should it be for any hard working American in their twilight years.