Roth IRA question

Indeed, deposits may come out tax free/ penalty free any time. This opens the possibility to treat the Roth as a secondary emergency fund if your retirement is funded elsewhere. Gains are taxed and 10% penalty if not 59.5.

The money you *contributed* comes out tax-free and penalty-free.

The money, if any, that you converted from a traditional IRA to a Roth IRA comes out tax-free. If it has been more than 5 years since you made the conversion, money from *that* conversion also fomes out penalty-free.

Any earnings will be subject to both income tax and the 10% early withdrawal penalty (unless you meet one of the exceptions, like using it to pay certain medical expenses of more than a certain amount).

And unlike trad IRA distributions which follow a pro-ration rule, Roth distributions follow a specific order:

• First your contributions are deemed to come out.
• Then your conversions are deemed to come out, in the order they were made.
• Then your earnings are deemed to come out.

This is all explained further in IRS Pub 590.

Thanks gentlemen, that's a load off my mind.