If at all possible, we never want to tap into our IRA or other investment account before retirement; however, unforeseen circumstances in a challenging economy may force you to do so.
What’s the Penalty
With the ROTH IRA you are not going to pay any taxes or penalty on the amount that was originally principle that you contributed
However, with a Traditional IRA you are going to owe income taxes and possibly a 10% penalty if you are under 59½.
There are Exceptions
If you are disabled or if the money was used for unreimbursed medical expenses, qualified higher education expenses, or the purchase of a first home, you may not have to pay the penalty.
If you fall into any of these categories make sure you talk to your tax preparer. If this was overlooked in the last three years look into amending your return.
BECU offers free seminars around the Puget Sound region on investing. To find one near you, visit www.becu.org/seminars.