Overspending and less income have created a vacuum of debt for the average American today, and out of desperation they are trying just about anything to get their heads above water. The credit cards are maxed out, and the funds from the equity loan on there home are now gone. The only thing left with any value is their retirement plan, and without staying within the list of exceptions that the IRS has laid out, the Roth IRA penalties are very steep, and can wipe out any profit and some of the contributed funds at the same time.
The only time that anyone should take money out with penalties looming, is a life and death situation for emergency surgery for a family member or the account holder needs performed. Even in this instance there are regulations that can let you take out money for this occurrence, but is under very strict guidelines that only a tax professional can explain to you. Otherwise just making withdrawals to pay off credit cards or making your car payment will just wreck any momentum towards profitability that account has made in the past. It is really a house of cards if not used for it’s original intent as that of a retirement plan.
If your bills are overwhelming you due to a reduction in pay at work, then you may want to consult with a debt counseling service on getting your monthly credit car bills reduced to a level that you can afford. Leave your Roth account in tact for when you are too old to work and still need a financial base to survive. The Roth IRA is a great instrument for making money for your golden years, but unless you are fifty-nine and one half years old and are willing to take a ten percent penalty even then, just leave the account alone.
Even when you feel you have a legitimate reason within the guidelines of exceptions that IRS has laid out, double check with everyone involved, even with IRS to make sure, you are not going to incur unforeseen penalties in the near future. The Roth IRA penalties are very extreme for good reason, to motivate people to leave them alone until they retire, plus the IRS wants their fair share if you do not want to play by their rules. In summary, just pretend the account does not even exist, even during the most tumultuous financial times in your life.