Temptation, when it comes to money, can be a dangerous thing especially when you ask When can you cash out a Roth IRA? If you have a Roth IRA account, you may be tempted to withdraw funds from that account. Chances are, you have a lot more money in there than you think you will need later. It is very tempting to withdraw funds early; in fact, you can withdraw funds whenever you want, but you may have to pay heavy taxes when you do so. Knowing when can you cash out a Roth IRA can save you a lot of money in the future. It also requires money-sense: you do not want to make any of these decisions lightly. Hopefully, this article will leave you a little bit wiser than you were before, making your future just a little bit more comfortable.

So, when can you cash out a Roth IRA? Before I answer that question, allow me to briefly explain a few things. Because the money in IRA accounts has already been taxed, you will not be charged any penalties if you decide to withdraw from there early. However, this refers only to the contributions to the account. The earnings—the money made from investments and such—have slightly different rules. Before you start deciding when can you cash out a Roth IRA, consider this: to cash out the earnings without penalty, you must meet the age requirement you have no doubt heard about by now. That age limit is 59 ½ and older for those of whom want to withdraw funds early. Otherwise, cashing out early will subject individuals to the 10% tax penalty.

However, just because you can cash out a Roth IRA whenever you want, doesn’t mean you should. As mentioned before, the money inside that account is tax-free. This can be a big advantage for your overall retirement savings later on. Saving for retirement is not something that can be done overnight. Sometimes the best thing to do is to stick things out for the present because once you reach retirement age, you will need the comforts much more then than you do now. Another thing to keep in mind before you decide when you can cash out a Roth IRA is that once that money is withdrawn, you can’t put it back in. Contribution limits do not allow for people to make up for money they have withdrawn. If you withdraw four thousand dollars now, you will not be allowed to replace that money later that year, because contribution limits keep track of how much was contributed, not how much remains at the end of each year.

In summary, you started out by asking When can you cash out a Roth IRA? By now you know that the answer to that question is any time—but you also know that just because you can withdraw money doesn’t necessarily mean you should. Cashing out your Roth IRA early should be your very last option. Even if it seems like the consequences today are small, those consequences will be much bigger when you reach retirement.