Try to find money elsewhere before tapping your IRA

— -- Q: My Roth IRA is three years old and worth less than what I put into it. I'm 30 years old and need to pull some of the money out to get me through some financial difficulties. Can I withdraw the money without a penalty?

A: When times get tough, investors may be forced to do the unthinkable: withdraw money from their retirement savings accounts.

Before discussing the rules for early withdrawals from a Roth IRA, I'd urge you to make absolutely sure you really need to tap your retirement money. This is money you will need in 30 years and beyond to live on in retirement. Taking the money out early could rob you of appreciation and compounding that help the money mount up for your retirement.

Consider other ways to make ends meet. Cancel subscriptions you don't need, and yes, that includes cable TV and your pricey cellphone plan, if you have those. Also, you might be able to sell some things in your home to tide you over.

If you've exhausted other options, and must withdraw from your Roth, there are many rules, and they make a distinction between earnings and contributions.

If you had earnings in your account, your first step would be to withdraw contributions you've made.

But since your Roth account is worth less than the amount you put in, you're really just taking your own money out. This makes it simple: You're free to take your money out and you do not have to pay a penalty or report the withdrawal to the IRS, since you have already paid tax on this money. The IRS says "you do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s)."

Mark Nash, partner at PricewaterhouseCoopers and co-author of 2009 Guide to Tax and Financial Planning, makes it even more simple. "The penalty only applies to the earnings component of the distribution. So if the value of the account is below your cost basis, there would be no income to recognize on the distribution, and also no penalty assessed."