Making an Early IRA Withdrawal From Vanguard

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What if, for some reason, you really do need to make a withdrawal from your IRA before you are 59.5 years old? One example is withdrawing a Roth IRA contribution without penalty, which you can do at any time. Some folks were wondering how hard it would be to do so, so I just tried to withdraw $100 from my Roth IRA held at Vanguard. Would they put up a fight? Require forms signed by a notary public? Ask for a DNA sample?

It turns out, they simply subject you to a long series of confirmation screens. You can follow along yourself if you have an account too – just be sure not to click on that final “Submit” or you’ll actually do it!

First, I logged into, went to my IRA account, and clicked on “Buy & Sell” to try and sell some one of my mutual fund holdings (VEIEX for the curious). They immediately throw up a warning:

Bravely, I clicked “Yes”. On the next page, I could choose the amount to sell and how I’d like the proceeds sent to me:

  • Electronic bank transfer—Two business days if submitted before 4 p.m., Eastern time; three business days if submitted after 4 p.m.
  • Wire— The redemption proceeds will leave Vanguard by the close of business on the next business day; two days if processed after 4 p.m. Eastern time.
  • Check—Within 7 to 10 business days.

For some reason, the Wire option wasn’t available in the pulldown menu. Instead, I was given the option to exchange the money into a fund within my taxable account held at Vanguard. I went ahead and chose to send it directly to my linked bank account. This led me to the tax withholding page:

Tax withholding information
Moving money out of a retirement account is a distribution. Qualified Roth IRA distributions are not subject to federal income tax. All or a portion of nonqualified Roth IRA distributions may be subject to federal income tax.

You can either elect to have no federal income taxes withheld from your Vanguard Roth IRA distribution or request withholding at a rate between 10% and 100%. You will remain liable for payment of federal income tax on the taxable portion, if any, of your withdrawal. Tax penalties may also apply if your estimated income tax payments or income tax withholdings are insufficient under federal or state rules.

Since I am pretending to only withdraw a contribution, I chose not to withhold anything. Again, a warning screen appears:

Do you want to continue?
The transaction you have selected involves a premature distribution that is not due to death of the original IRA owner. This distribution will be coded and reported to the IRS as J—Early distribution from a Roth IRA.

Next up is a screen about whether you’d like a tax withholding notice sent to you via e-mail or snail mail.

Receive a tax withholding notice
Because you are completing a distribution from a retirement account, you may request a copy of the tax withholding notice. This notice is for informational purposes only.

Since my fund has a redemption fee, the next page reminds me that this fee will be taken out of the proceeds of the sale:

The Emerging Markets Stock Index Fund imposes a 0.25% redemption fee on the total amount of this redemption.

I acknowledge all this, which finally leads me at the last confirmation page.

Review & submit
Your Vanguard® fund redemption will be processed using the closing share price on the business day on which Vanguard receives your request. Requests received after the close of the New York Stock Exchange (usually 4 p.m., Eastern time) will be processed using the next business day’s closing price.

That’s it! I quickly click on Cancel, and no action was taken.


In less than 2 minutes, I was able to request an early withdrawal online from my Vanguard IRA. No humans, no forms to send in. Good to know. Taking 2-3 business days directly into my bank account seems fair enough. A wire transfer would be even faster, although there would likely be a fee involved.

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  1. Excellent information. It’s good to know that if I were ever in the unfortunate situation where I needed to deplete my EF, I could use this as a last resort if I couldn’t get my hands on a credit card with a low to nil promotional APR.

    The only big question that I haven’t found an explicit answer to after a bit of research is this – it has been mentioned several times that only your contributions are non-taxable. Is there a simple way to discover what your contributions are? Someone commenting on another thread gave this example:

    “you can invest $5,000 in a mutual fund, then have a 50% market downturn. That leaves you with $2,500.

    Let’s say in a previous year, you invested $1,000 in a stock that’s now worth $2,500…

    You Roth IRA value may be $5,000 at this point, but all you can withdraw is $3,500.


    Because $1,500 of that $5,000 is considered investment gains by the IRS.”

    Being that you could (and hopefully do) have a portfolio filled with several diverse mutual (or if available, index) funds, it seems that it would be extremely complicated to back-track each fund to determine if it ever dropped below your contribution – especially if you do what most people do and contribute to your 401K on a weekly basis.

  2. In general, withdrawing from any IRA should be pretty simple. It’s your money, you ask for it, they give it to you.

    Getting the custodian to report it correctly for tax purposes (on the 1099) is always the difficult part of the process. I would think a ROTH IRA distribution is simple to report, but lord knows. They need to determine if it is a taxable/penalized transaction, or not, and report it to the IRS accordingly.

    Of course, I realize that a lot of the battle is they put it on the taxpayer to know what kind of distribution they are taking. & to check the appropriate box on the form. Makes my life difficult as a tax professional. Most my clients check the wrong box.

  3. @Mike D – If you look at the IRS Worksheet 2-3 on Pub 590 “How Do You Figure the Taxable Part?”, it appears that as long as your withdrawal is less than your total contributions, it won’t be taxable.

    This is explored in the other post linked above:

    In your example, you should still be able to withdraw up to $6,000 (you contributed $5k and then $1k) as long as you have that amount ever in your IRA. The gains are not tracked individually to their respective contributions.

  4. Thanks for the timely article. I think I’m going to raid my Roth soon for home down payment.

    For MIKE: Regarding the order of how IRS counts Roth distribution, here’s an article I always refer to (includes few good examples as well) –

  5. You say “In your example, you should still be able to withdraw up to $6,000 (you contributed $5k and then $1k) as long as you have that amount ever in your IRA. The gains are not tracked individually to their respective contributions.” So long as you only put the amount you contributed and NOT any of the gains, you should not be taxed. Is that correct?

  6. Another important point is that once you withdraw the contribution from Roth IRA you cannot put it back in.

  7. I assume though you can make up to your max yearly contribution thereafter, though?

  8. Good info Jon! Pretty brave of ya too 🙂

  9. Thanks for the info. I have additional news on this item however. I made a withdrawal request on March 27th, they sent me a form to sign and when I sent it back they took the money out of my account, This was April 1. After 14 days, I am supposed to be receiving my check tomorrow via Fed Ex. They did not do the electronic bank transfer as was suggested, in fact they didn’t even try. Instead they tried to wire it 4 times and messed it up each time, They only do the wires 1 time per day, so when you find out that they messed it up it’s the next morning, as wires go out after 4 pm. Long story short, if you want to remove “your” money, and you are invested with Vanguard, expect that it will take a minimum of 3 weeks for them to get the money to you, although they will be sure to take the money out of your account teh instant you ask them too (just you won’t get it). If you are invested with Vanguard, I am sorry to hear it, wish I never would have.

    • This post is old but wanted to let you know I’ve gotten 300,000 from Vanguard almost immediately. Week you know sold the next day and was in my checking account by the 4th day. Vanguard has made me tons of money. Let me retire in my 40s because of them.

  10. My husband and I withdrew our contributions in December. He received a 1099-R and I received a Form 5498. His IRA is held with Edward Jones and mine with Scottrade. We both have Roth IRAs. My question is…..where in Turbo Tax will I put that I withdrew all my contributions for the year (and no earnings were withdrawn). Anyone know?

  11. I read this article on Monday, April 4th. Requested funds to be transferred to my account electronically and I am happy to say they are there this morning Wednesday April 6th. So in less than 48 hours I had my money. Not sure what happened to PA but just wanted to let others know Vanguard did as they promised to do.

  12. I withdrew the total amount out my roth ira and transferred to my bank. I have no idea if I have to pay taxes on it. I have a 2010 1099-r form but it does not say what is the taxable amount, box 2b says not determined taxable amount. Any suggestions on what to do will be greatly appriciated.

  13. If you are investing in any fund, whether traditional IRA, Roth IRA, or merely stock investing, you should keep some record of the amount of your investment. At some point in the future, you WILL be required to report it to the IRS.

  14. I need some help (Tax Lawyer?) to withdraw my Retirement Savings Plan funds from Vanguard and transfer them to UK. I am a british citizen and worked for a US firm in Vietnam.

    I am exempt from tax in US because I am not a US citizen and dont live in the USA but Vanguard is wasting my time with many reasons not to transfer my money.
    Will apprteciate if someone could help me sending a tax expert’s address who can help for this.

    Thank you and best regards,


  15. is there waiting period to withdraw from Vanguard IRA after recieving large rollover from ex-husband’s 401k due to DRO (divorce)? need funds asap to pay debts and be able to stay in home…

  16. I did not see a Buy or Sell link to click on….

  17. Getting my dispursement for $3600 has been a nightmare. Going on 2 weeks now with my financial advisor. The funds were available on a Monday. Then I had some forms to fill out. Then the forms were wrong. Then there was some information that was missing and couldn’t be completed. Then they called again today saying they needed my employer information. I already refused to work with the initial advisor when I created the account and their bumbling has continued more than a year later. As soon as I get MY money I’m going to be rolling over my IRA to a different institution. Word of warning: Do Not Use LPL Financial!

  18. Can someone please fax me the terms of withdrawal for a vanguard 401k?!? I can’t find them anywhere. 866-507-7885.

    THank you!

  19. BFreeman says

    Why does it take VANGUARD up to 90 days to send me my money? I requested a lump sum payment of a very small amount??? God made the world in 7 days why can’t Vanguard process as faster than “as administratively” possible my money

  20. I want to withdraw from my traditional ira to purchase a second property .. It is held with LPL, should I just go ahead and pay the 10 percent Fed or hope I have enough writeoffs to not have to do the total ten, maybe half?
    It is a guaranteed 5 percent interest earned on the money as had it there for way over 5 years that Pac Mutual requires, but what good is the ten percent when you are paying on a credit card that charges 19 percent Wouldn’t I be better just taking the funds, buying the property and paying off all the credit cards . I have pension income that will suffice until death. Thank you. I am 70. Have to take withdrawals at 70 and 1/2 anyway. Why leave it for the children when they don’t care and are pretty much set . So want to buy and RV lot in another state, rent primary home out, and go on the road. if I rent the home out, can’t I claim expenses for me to some point on the road if I preform my home based business from the RV.

  21. anyone know the answer on my question above?
    I want to withdraw from my traditional ira to purchase a second property .. It is held with LPL, should I just go ahead and pay the 10 percent Fed or hope I have enough writeoffs to not have to do the total ten percent, maybe half?

    We are 70 is there a penalty for closing out the account ..? I read somewhere that Disability would prevent one having to pay this … why did our financial planner not tell us this. Been disabled quite some time.

  22. I am posting long after the OP, but my recent experience with withdrawing money from my wife’s IRA Vanguard is bad. Its our first withdrawal from vanguard and after 8 working days, I still haven’t received the check and based on some of the comments here and elsewhere I am worried how long its going to take to get the funds.
    Service with other providers in this regard is great. I think I wil shift all of my wife’s accounts at vanguard somewhere else.

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