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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4037
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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My husband and I set up Roth IRAs about six years ago. We

Resolved Question:

My husband and I set up Roth IRAs about six years ago. We invested $3000 and then about a week later another $3000 as it was end of Dec/beginning of January. So we have a total of $12000 in Roth IRAs that was contributed not earned. our advisor at the time told us that after 5 years we would be able to take out the initial investment without tax or penalty. He has since left and our new advisor says he has never heard of that, that if we want to take out any portion contributed or earned that we will have to pay 10% and taxes unless we meet a qualifying event (which we do not. we are 40, it is not for school, medical, new home, etc...) we want the money to remodel our basement. I am leary because we did not choose this advisor, our old one left and he was randomly assigned (Waddell and Reed), after we left Missouri so we never even met this person. I am not sure what to do.
Submitted: 3 years ago.
Category: Tax
Expert:  Stephen G. replied 3 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

The only thing that would be subject to both income tax & the 10% penalty would be any investment gains, not your original contributions.

Stephen E. Grizey :

So you can remodel your basement worry free.

Customer:

Is there somewhere on the IRS site that substantiates this or something I can send to our "advisor"? I guess if necessary I will need to talk to his supervisor? I kind of feel like either through ignorance or a desire for us not to remove our money he is holding it hostage :)

Stephen E. Grizey :

Sure let me give you a link, hang on..............

Stephen E. Grizey :

http://ezinearticles.com/?The-Roth-IRA-Early-Withdrawal-Penalty&id=2636621

Customer:

Terrific. Thanks. Glad to know our first advisor did not mislead us.

Stephen E. Grizey :

That's one quick one, if this so called "investment advisor" doesn't know this, you need a new advisor.

Stephen E. Grizey :

Please remember to ACCEPT.

Customer:

I agree. Like I said, after we moved out of state were assigned him. Haven't moved anything around with them in years as we started with another company. Thanks, XXXXX XXXXX

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4037
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 4 other Tax Specialists are ready to help you

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