Is a Roth IRA distribution before 59 1/2 taxable and subject to penalty? Please note that the distribution was that of principal and not earnings.

A withdrawal of Roth IRA principle is non-taxable and penalty free. More specifically, a withdrawal is considered according to the following order: 1) regular roth IRA contributions, 2) taxable rollover conversions (on first-in, first-out basis), 3) nontaxable rollover conversions, and then 4) earnings. This effectively means that you can usually withdraw contributions free of any tax liability or penalty. Let's suppose you initially funded a Roth IRA with $20,000 and the account is now worth $29,000. If you withdrew $21,000 before you reach the age of 59 1/2, $20,000 would be free of the 10% early withdrawal penalty and only $1,000 would be subject to the 10% early withdrawal penalty and tax liability on the earnings.