taxes due on 72T distribution from a roth IRA
I have a ROTH IRA I converted in 2010. I have increased the value 10 fold in a self directed account.
I have also already withdrawn my initial investment conversion amount of $75,000.
The account is now valued at approx.. $500,000 and growing at around 8% currently.
I have already semi-retired at age 56 and need additional income to maintain my lifestyle until I reach 59 1/2
my wife has about the same amount in her self directed ira earning about the same, but 1/2 of hers is still traditional, and hers is mostly tied up in real estate we don’t want to sell yet.
If we did this 72 t distribution now do we have to pay taxes on the distributions from the roth??
I see we don’t have to pay the penalty but what about taxes., and having to claim the income?
Permalink Submitted by Alan - IRA critic on Fri, 2016-04-29 18:50
If this is your only Roth IRA and you do not have a balance of regular contributions or conversions, then your Roth is entirely composed of earnings. A distribution of earnings will be taxable until you reach 59.5 but with a valid 72t plan the 10% penalty on the earnings is waived. A 72t plan started now would have to run for 5 years, and you would still report your non qualified Roth distribution on Form 8606 like you have for the distribution of conversion money. You would also need a 5329 to claim the 72t penalty exception code 02.