[Brandon]

Roth IRA: How can recent cash dividends count as contributions so I can withdraw them for an unexpected expense?

I understand that contributions can be withdrawn without penalty/tax at any time.

So if I recently earned $100 in dividends, instead of reinvesting that, can I withdraw the $100 and have it be considered as withdrawing $100 of contributions?

Or if I’m under 59.5 and want to avoid penalty, am I only able to reinvest that to let’s say VTI and then afterward sell some VTI to withdraw cash that is truly considered contribution?

Thanks and sorry if my phrasing is confusing, feel free to use examples please if that helps explain how this truly would work.

[Walter]

No, only the principle you put in can be pulled without penalty. Let’s say you’ve put $5k in every year for the past 5 years and never withdrawn it, then you can pull out up to $25k.

You can’t pull out investment growth, including dividends, without penalty

[Joel]

Dividends are irrelevant. Only contributions count as contributions. Your contributions are generally whatever the Roth IRA custodians have reported as contributions on IRS Form 5498s.

[Sarah]

You can withdraw 100% of all contributions at any time and any age. But nothing beyond contributions.

So, if you have 100 dollars in dividends as cash in the account, then withdraw it and it’ll count against your contributions.

[Author]

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