Q&A: Roth IRAs and taxes

Dear Liz: I sold some stocks from a Roth IRA to pay for some bad debts. Is this going to count as taxable income for this year?

Answer: You can always withdraw the amount you contributed to a Roth IRA without owing income taxes or penalties. For example, if you withdrew $10,000 but your contributions over the years totaled $10,000 or more, then you didn’t incur taxes or penalties.

You also won’t have tax issues if you withdrew more than your contributions but are 59½ and have had the account for at least five years. If you’re old enough but haven’t had the account long enough, you’ll pay income taxes but not penalties on the part of the withdrawal that exceeded your contributions — in other words, on the earnings.

If you’re under 59½, you could be subject to taxes and penalties on any earnings you withdrew. Please consult a tax pro for details.