Roth IRA Distribution
There is a client who needs to take a distribution out of his Roth IRA. Account balance is now $13,961.32. His prior year contributions are as follows:
2005 6/17/2005 $1,750
2006 1/19/2006 $3,583.31
2007 1/18/2007 $3,999.96
2008 1/16/2008 $3,999.96
2009 1/16/2009 $666.66
TOTAL CONTRIBUTIONS $13,999.89
If the client takes a distribution from his Roth what penalties/taxes will he incur, if any?
Permalink Submitted by Edward Czapor on Thu, 2011-01-27 19:02
Depends on his age and amount of distribution. If the total is from regular contributions, he can withdraw up to $13,999.89 without tax or penalty regardless of age. If under 591/2 years of age, he would be taxed and penalized on any amounts that are greater due to earnings. If 591/2 or older, all distributions are qualified since he has established a Roth for 5 years, and there would be no tax or penalties.