There are many Roth IRA rules. The owner of a the IRA can make a Roth IRA withdrawal from their Roth IRA at any time, but unless it meets Roth qualifications a Roth IRA withdrawal on earnings will be penalized and taxed. There are some basic qualifications, and at least one of them must be met in order for the an earnings withdrawal to not be  taxed or to avoid a penalty. These qualifications are as follows:

1 ) The withdrawal must be made by the owner of the Roth IRA who is or at least 59 and one half years of age;

2 ) The withdrawal must be made to the Roth IRA owner’s beneficiary or estate, after their death;

3 ) The withdrawal must be made to the Roth IRA owner after they have been determined disabled;

4 ) The withdrawal must be used to pay for qualified first-time home buyers expenses, with a $10,000 maximum lifetime benefit;

5 ) The withdrawal must be one in a series of “substantially equal periodic payments” made over the lifetime expectancy of the Roth IRA’s owner;

6 ) The withdrawal must be used to pay medical expenses that are a) not reimbursed elsewhere, b) exceed 7.5% of the Roth IRA owner’s AGI (adjusted gross income);

7 ) The withdrawal must be used to pay for insurance premiums after the Roth IRA owner has already received unemployment compensation for 12 weeks;

8 ) The withdrawal must be used to pay for qualified higher education expenses for either the Roth IRA owner or his or her eligible dependents.

When a Roth IRA withdrawal is made, it is also important to understand that the withdrawal is subject to the five year rule. A withdrawal of any monies contributed to a Roth IRA can be made at any time the owner chooses, regardless of the five year rule; however, any earnings withdrawn from a Roth IRA are subject to meeting one of the eight qualifying statements above and the five year rule. The five year rule is simply that any earnings withdrawn from a Roth IRA must be made at least five tax years after the original contribution. The trick here is that tax years are not calendar years and last longer than 12 months.

Tax years end on April 15 of each year. So any contribution made by April 15, 2010 will go towards the 2009 tax year, and the clock for the five tax years will have begun ticking on January 1, 2009. Therefore any earnings may be withdrawn without penalties or taxes beginning January 1, 2014, so long as one of the other eight qualifying statements are met.

Roth IRA withdrawals of earnings made outside of the qualifications are subject to some hefty fees and taxes because the money that is contributed to a Roth IRA is not taxed. So when money is withdrawn from a Roth IRA, it is charged income tax and an additional 10% Roth IRA withdrawal penalty if it does not meet these requirements. These are just some of the Roth IRA withdrawal rules and Roth IRA qualifications that exist.

In the classic battle of Roth IRA vs 401k there are many factors to weigh.  There are too many factors to say which would be best for you.  If you want to switch, its also possible to do a 401k Rollover to Roth IRA if you have your money tied up in a 401k account and want to switch it to a Roth.  There are additional rules if you end up with an inherited IRA also, so keep this in mind.