My wife and I have been having some serious financial discussions lately. We’re thinking of putting our house on the market and moving. To that end, we’ve been doing an overview of our financial situation. As part of that discussion, we took a look at our Roth IRA accounts to see how much money we might be able to access if we had to.

Again, I’m not a huge fan of taking money out of your Roth IRA—there’s investment growth to be had there—but it is nice to know that cash is available if needed. It got me thinking about how Roth IRAs let you withdraw contributions without penalty. What if I wanted to withdraw contributions temporarily with the plan of eventually putting them back? Is that an option? I had no idea what the answer to this question was, so I figured there might be some readers out there with the same question.

Can I Withdraw Roth IRA Contributions Early?

Yes. Absolutely. You can withdraw your Roth IRA contributions—all of them—at any time without paying any taxes, penalties, or fees. This is a unique characteristic to the Roth IRA. You can’t withdraw contributions to 401(k)s and Traditional IRAs without worrying about losing a good chunk of your withdrawal to fees.

Can I Redeposit Early Withdrawn Contributions in My Roth IRA?

Maybe. The answer is yes in certain situations, and no in others. If you withdraw contributions made during the current tax year you have until the end of the tax deadline (April of the following year) to redeposit the money back in your Roth IRA.

If you withdraw contributions made in other years you can redeposit up to your contribution limit ($5,500 plus a $1,000 “catch up” if you are 50 or over) by the end of the tax deadline.

If you withdraw more than you can contribute in a year, you cannot re-contribute 100% of those funds during the same year.

It sounds confusing, but essentially you are allowed to withdraw your contributions whenever you want. But you can only put back your contribution limit every year. Let’s look at some examples for clarity:

I’ve got $30,000 in my Roth IRA. I’ve contributed $20,000 in prior tax years and $5,500 this year. The remaining $4,500 has come from investment growth (earnings). If I withdraw $5,500 of my contributions from this year. I have until April 2018 to re-contribute those funds back into my Roth IRA.

Essentially, by withdrawing my contributions from this year it is like my contribution never happened. My Roth IRA contributions toward my limit are reset back to $0. If I go past April 18, 2018, and haven’t contributed my $5,500 back into the Roth IRA then I won’t get to contribute for 2017.

Same situation: $30,000 in the Roth, $20,000 from prior year contributions, $5,500 contributed this year, and $4,500 in growth. I withdraw $2,000 of my contributions. I have until April 2018 to contribute another $2,000 or my Roth IRA contribution for 2016 will only be $3,500.

Same situation, but this time I withdraw $10,000. I’ve withdrawn my $5,500 in contributions from this tax year, as well as $4,500 from the past. I cannot re-contribute the full $10,000 this year. I can only contribute up to my maximum of $5,500.
There is no way to put the entire $10,000 back into the Roth IRA other than contributing the remaining $4,500 to my Roth IRA in the next tax year, plus $1,000 more to bring it up to $5,500. (But then, one hopes, you were already budgeting to invest another $5,500—but you wouldn’t be able to do that.) To effectively borrow from your Roth IRA, you would need to have already made a contribution earlier in the year, withdraw that contribution and pay it back before tax time the following year. There is no formal “loan” program with a Roth IRA like there is with a 401(k) plan.

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