What happens if a Roth IRA distribution is made before the owner turns 59½?

A Roth IRA distribution made before the owner turns 59½ typically may be subject to taxes and penalties. When distributions are taken from a Roth IRA prior to this age, they are not considered qualified distributions unless certain conditions are met. For example, the account must have been open for at least five years, and the distribution must qualify for an exception, such as being used for a first-time home purchase or due to disability.

If the distribution does not meet the qualifications, the earnings portion may incur income tax and an additional 10% early withdrawal penalty. It's important for account holders to understand these conditions to avoid unexpected tax liabilities.

In contrast, if the distribution occurs after 59½ and the account has been funded for at least five years, it would generally be considered a qualified distribution and would not be subject to taxes or penalties. Thus, recognizing the implications of withdrawing funds from a Roth IRA before the age of 59½ is essential for informed financial decision-making.