Roth IRA withdrawal prior to 59 1/2
Client has deposits to her Roth IRA from 2001 – 2006 of $12,185. She is 39. She took a withdrawal of $9,1173 in 2011. She has received a notice from the IRS for taxes due. Her 2011 1099 was coded J in box 7 – IRA distribution. Does she owe taxes? Please help.
Permalink Submitted by Alan - IRA critic on Fri, 2013-06-28 23:03
If this was her only withdrawal, she does not owe any taxes. The IRS Notice is most likely caused by client’s failure to file a correct Form 8606 for 2011. The form must show the amount of her regular contributions of 12,185 and since that figure is more than she withdrew, there is no taxable income. Taxpayer should keep records of all their contributions in order to have the details to complete an 8606, at least until their Roth is fully qualified.