Answers to 5 Burning 401(k) Questions

Direct contributions to a Roth IRA may be withdrawn tax free at any time. Rollover, converted (before age 59½) contributions held in a Roth IRA may be withdrawn tax and penalty free after the "seasoning" period (currently 5 years). Earnings may be withdrawn tax and penalty free after the seasoning period and age 59½ (or other qualifying event). All withdrawals from a traditional IRA are taxed as Ordinary Income, and a penalty applies for withdrawals before age 59½. In contrast, capital gains on stocks or other securities held in a regular taxable account for at least a year would be taxed at the lower long-term capital gain rate, which is currently 15%. This higher tax rate for withdrawals (and tax on the original contribution) from a traditional IRA is a quid pro quo for the deduction taken against ordinary income when putting money into the IRA.

Rebecca of GA 8:54AM February 19, 2009

Great info. Thanks!

Sara of NV 2:24AM December 13, 2008

A great resource - many thanks!

Mike of CA 12:33AM December 13, 2008

A great resource - many thanks!

Gary of RI 8:29AM November 17, 2008