tax on Roth IRA Distributions
I am under age 59 and have held a Roth IRA for more than 5 years. My balance has the original contribution with earnings. If I decide to take out my original contribution, can I distribute this tax free?
I am under age 59 and have held a Roth IRA for more than 5 years. My balance has the original contribution with earnings. If I decide to take out my original contribution, can I distribute this tax free?
Permalink Submitted by Alan Spross on Tue, 2010-04-20 00:11
Yes, you can take out your balance of regular contributions tax and penalty free at any time. However, you still must report the distribution on Form 8606.
Permalink Submitted by [email protected] on Tue, 2010-04-20 01:44
OK, I understand the tax free issue. But, if I am under age 59 1/2(assuming I have satisfied the 5 year hold period), how am I able to avoid the penalty free rule. I know there are qualified distributions to avoid the penalty, but are you telling me that I can just take out my original contributions at anytime without penalty?
Permalink Submitted by Alan Spross on Tue, 2010-04-20 01:59
Yes, you can take out your REGULAR contributions any time without tax or penalty.
But conversions must be held 5 years before you can withdraw them without incurring the 10% penalty. This period also ends at 59.5. Make sure that you are not withdrawing a conversion done after 2005, or you incur the penalty. Conversions only come out AFTER all your regular contributions have been distributed.