kid using retirement to fund a startup

I can't say that I recommend this, Dustin. Although you will probably have little or no penalty for withdrawing such a small amount, you are still selling the investments in the Roth IRA at a time when the market is going up rapidly. Cashing out retirement early to fund something is a bad habit to get into, especially at a young age. If you keep running to your Roth IRA everytime you need money, you will have nothing left when you actually retire.

Besides, $10,000 isn't a lot to live on without a job, and would probably be gone pretty quickly, especially given the volatility of launching a tech startup. There are two different routes that I would take:

1. Build up some CASH as quickly as possible. I would make yourself a goal of saving $20,000 in the next 12-18 months, which will give you $10,000 as an emergency fund and another $10,000 as startup funds for the business. Sell stuff, live on nothing, get an extra job.
2. Start the tech business part-time while you continue your full-time job. Once you sure it is bringing in some real income, then you can make plans to gradually shift into doing that full time.

Either case requires lots of extra time and work, but your retirement account will thank you later for not cashing it out (that $10,000 will most likely be over $500,000 when you reach retirement age).

Yes, you can do this. It probably would just be a matter of calling up the place where you have your IRA and requesting a check.

Also, depending on how much your Roth IRA has grown, your tax may be very small. Since you're under 59 1/2, and your withdrawal does not fall under any IRA exceptions, you'd pay income tax at your marginal rate, plus a 10% early withdrawal penalty, on the earnings. If your Roth IRA has lost value (it's worth less than the contributions you've made) then you'd owe no tax or penalty at all. (Basically, you'd get your entire $10,000.)

Just double-checking: This is a Roth IRA and not a 401(k) plan? If that's the case, then the rules are different.

I got to agree with Cyrus, I think withdrawing from your IRA to start a business is a bad idea. I would stop funding retirement as just build a big pile of cash. Do your tech business part time at first and grow slowly. That way you won't be out in the cold if you leave your current job and your start up does not succeed right away.

What did you decide, Dustin?

I cashed out my retirement out when I had the broke-itis. I used it to pay off some credit card debt. Two years later I was back in debt, but without any retirement savings.

A cautionary tale, and perhaps one that is not precisely on-point, but I share it to echo the wisdom in Cyrus's suggestion. Save up some CASH. Then, while you are launching your soon to be successful business, your $10K will be working away in the background. My two (late) cents.