Pre 59 1/2 Roth IRA withdrawals
I have a client, Doug (DOB 3/15/57), he would like to take a partial distribution from his Roth IRA before age 59 ½ (9/15/16). IRS Pub 590-B states that “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).”
His current Roth IRA value is $125,300.00, his basis is $62,000.00. Does that mean that he can withdraw now, some of his basis without a 10.0% penalty?
I appreciate any assistance.
Permalink Submitted by Alan - IRA critic on Tue, 2016-03-22 02:12
His basis of regular contributions can be withdrawn any time without tax or penalty. If his withdrawal includes Roth conversion money done in the last 5 years, the conversion money is not taxed, but is subject to the 10% penalty on the pre tax portion of these conversions. Regular contributions come out before any conversions, and conversions come out starting with the oldest conversions.