Is it possible to use Roth IRA to pay mortgage or paying off mortgage

Forum|Forum|4 years ago
May 5, 2022
3 replies
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Just making an example, if someone does well on Roth IRA and there is quite some money on Roth IRA, is it possible to find a way to spend some money without penalty? Like paying off mortgage for first house?

I heard that qualified exception is first time home purchase. Not sure what other exceptions (without 10% penalty) for early withdraw.

Thanks.

By the way, I mean early withdraw

Not A Product Question

Critter-3

Your contributions to the ROTH can always be taken tax and penalty free. If you have the ROTH open for 5 years or more AND you are over the age of 59.5 then you can invade the earnings as well tax & penalty free for any reason.

VAerAuthor

Employee

Of course I meant early withdraw. When I say penalty, that is early withdraw penalty.

Critter-3

If you take an early withdrawal you will pay a penalty and taxes no matter what you did with the money.

Hal_Al

Employee

The home buyer exception to the 10% penalty, on early withdrawals, does not apply to paying down a mortgage.

As others have said, you are allowed to withdraw the contributions (what you put in) portion of your Roth IRA, at any time without tax or penalty. If you withdraw any of the earnings portion, before age 59.5, that will be subject to tax and the 10% penalty.

The are additional rules on withdrawing money that was converted to a Roth IRA. See https://www.investopedia.com/ask/answers/05/waitingperiodroth.asp#:~:text=You%20can%20always%20withdraw%20contributions,at%20least%20five%20tax%20years.