oth withdrawal before year 5
I have a Roth IRA which has the original investment and appreciation.
I want to withdraw the original investment now, even though the Roth has only been in existence for 3 years. I am over 59 1/2.
Does any one have experience with this type of withdrawal and how the trustee will code the 1099.
It is my understanding that the FIFO rules apply, so the original investment comes out first, tax free.
Permalink Submitted by Alan - IRA critic on Wed, 2015-08-05 23:48
The 1099R code will be T, which reflects that the Roth custodian knows your age, but does not know whether you have held your Roth for 5 years or not. These rules apply to all your Roth IRAs if you happen to own more than one account. You are correct that your regular contributions come out first tax and penalty free before your Roth is qualified, then your conversions, and earnings last. Since you are over 59.5 you no longer have a 5 year holding period for conversions and will not have a penalty regardless of how much you withdraw. Until 5 years has passed from your first Roth contribution, you will have to file form 8606 to report your non qualified distribution even though that distribution may well be tax free. Once the 5 years has passed, you will no longer need an 8606 to report your distribution, it will just go on line 15a of Form 1040.