Q. The early withdrawal penalty is obviously different from taxes; so for Roth, if you take withdrawals during or after the calendar year you turn 55, you won’t be subject to the 10% early withdrawal penalty, but you will owe taxes on the Roth earnings? If yes, can you choose to take your withdrawals from the Traditional balance until you turn 59 1/2 and then start taking them from the Roth at that point in order to avoid the tax on Roth earnings?
A. I think you have the tax and penalty rules right, but you cannot choose which money to withdraw to avoid the tax on the non-qualified Roth money. You can, however, get around the tax by rolling over the Roth money to an IRA and waiting until age 59 1/2 to withdraw it. I am not a CPA, so you should consult one before you proceed.
