Early Roth Withdrawl: Do You Pay Capital Gains and Penalty?

4 min read

Investing in a Roth IRA can be a great way to save for retirement, as it allows you to take advantage of tax-free withdrawals in retirement. However, if you withdraw money from your Roth IRA before you reach age 59 1/2, you may be subject to taxes and penalties on those early withdrawals. Capital gains, or profits earned from the sale of investments, are usually considered taxable income and may be subject to taxes when taken early from a Roth IRA. Additionally, any withdrawals taken before you reach age 59 1/2 are subject to an additional 10% early withdrawal penalty. It is important to keep these issues in mind when considering an early withdrawal from a Roth IRA.