Erroneous Roth Distribution
I think I know the answers to my questions, but it would be nice to get some advice from someone that’s smarter at this than me. Here’s the situation:
My age = 67
Converted $10K from traditional IRA to Roth in early 2012.
Reported conversion to IRS via 8606 for 2012, and income taxes paid on the distribution.
Screwed up and withdrew $2K from the Roth in late 2016, i.e. before the five-year period.
No other Roth IRAs except this one.
Please confirm or correct the following:
Since the basis ($10K) is more than the distribution ($2K), there is no tax due this year, i.e. 8606 line 25 will be less than zero.
Since I’m older than 59 1/2, there is no penalty.
There is no need to file Form 5329.
Thanks in advance – JK
Permalink Submitted by Alan - IRA critic on Sat, 2017-01-28 20:41
You are correct assuming this is your only Roth IRA. If you made a legal Roth contribution in any year prior to 2012, then your Roth is qualified and you do not even need an 8606 to report this distribution. And if you take any future distributions you also will not need an 8606 because your Roth is qualified as of 1/1/2017, having met the 5 year holding period. For your 2016 distribution, the 2,000 will also go on line 15a of Form 1040.
Permalink Submitted by John Kollig on Sun, 2017-01-29 13:23
Thanks for the help!!