Roth IRA distribution rules
I am 65 years old and have 2 roth IRA accounts: The first roth IRA is over 5 years old. The second roth IRA was created this year (2022) after doing a roth conversion and paying the taxes. If I take a distribution from the second roth ira, will I have to pay taxes on the earnings?
Permalink Submitted by Alan - IRA critic on Sat, 2022-09-10 00:51
No. Because your first Roth account is qualified, all your Roth accounts are qualified because they are treated as one combined account. You can take a distribution from either account tax and penalty free anytime you wish, and will only need to report it on line 4a (not 4b) of Form 1040. You do not need a Form 8606 to report any distributions, but you will need an 8606 for your 2022 return to report the conversion. Again, any gains you have are now tax free.
Permalink Submitted by Marcy Graham on Sat, 2022-09-10 20:04
So in other words, I understand that when I have at least one “qualified” Roth account, all my other Roth accounts are also treated as “qualified”. I wanted to make sure I understood the rule in IRS Publication 590-B “Distributions from Individual IRAs”: (https://www.irs.gov/publications/p590b#en_US_2021_publink100089543),page 69 (What are Qualified Distributions). It says a qualified distribution “is made after the 5-year period beginning with the first tax year for which a contribution was made to a Roth IRA set up for your benefit.” Thanks again for confirming the rule for me – much appreciated! Thanks again!