Every time you take money from a traditional IRA, no matter how old you are, you have to pay income tax. Roth rules are different. Money you contribute to the account you can withdraw at any time for any reason. To remove earnings on that money, you have to meet a two-pronged test. You must have owned the Roth for five years and you must be at least 59 1/2 years old. If neither is true, you'll owe tax and a 10 percent penalty. If you meet the five-year test before you turn 59 1/2, you'll pay just the 10 percent penalty.
Figure out your adjusted gross income by filling out the first page of IRS Form 1040. Your tax bracket is based on your AGI and filing status.
Look up your income tax rate on the IRS tax rate schedule. Find the schedule at the IRS website or on tax or financial sites. Be sure to use the schedule for the current tax year.
Multiply the amount of the distribution by your tax rate to discover the income tax. For example, you take $20,000 from the traditional IRA and your tax rate is 25 percent: $20,000 times 0.25 equals $5,000, your income tax on the distribution.
Deduct the income tax from the distribution. In this example, $20,000 minus $5,000 equals $15,000. This is your net distribution if you have already reached age 59 1/2.
Multiply the withdrawal amount by 0.1, the equivalent of 10 percent. If you are not yet 59 1/2 and own a traditional IRA, you must pay a 10 percent penalty on your distribution. To continue with the example, multiply $20,000 by 0.1 to arrive at $2,000, the penalty amount.
Add together the income tax and penalty figures and subtract the sum from the distribution. In this example, $5,000 plus $2,000 equals $7,000, and $20,000 minus $7,000 equals $13,000, your early withdrawal net.
Figure your adjusted gross income by working through the first page of IRS Form 1040. Your tax rate is based on your AGI and filing status.
Look up your income tax rate on the IRS tax rate schedule. Find the schedule at the IRS website or at tax or financial sites. Be sure to use the schedule for the current tax year.
Get your Roth IRA balance from your printed or online statement or by phoning your trustee.
Deduct the total amount of your contributions from the Roth balance. For example, you have contributed $5,000 per year for five years to a Roth and your current balance is $30,000: $30,000 minus $25,000 equals $5,000. The $5,000 figure represents earnings in the account.
Multiply the earnings amount by 0.1, the equivalent of 10 percent, if you are not yet age 59 1/2. In this example, $5,000 times 0.1 equals $500, the penalty amount.
Deduct the 10 percent penalty from the earnings amount. Here, $5,000 minus $500 equals $4,500. If you have owned a Roth for five years and you are under age 59 1/2, $4,500 is your net distribution. You can stop calculating here.
Multiply the earnings amount by the tax rate if you are not yet age 59 1/2 and have not owned a Roth for at least five years. In this example, your tax rate is 15 percent, and $5,000 times 0.15 equals $750, the income tax on the earnings.
Add the penalty and income tax amounts and deduct them from the earnings. Continuing with the example, $500 plus $750 equals $1,250, which represents income tax and penalty on the Roth earnings. Subtracting $1,250 from $5,000 leaves $3,750. If you meet neither the five-year requirement nor the age 59 1/2 test, your total Roth earnings distribution is $3,750.
D. Laverne O'Neal, an Ivy League graduate, published her first article in 1997. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish. Her strongest interests are the performing arts, design, food, health, personal finance and personal growth.