Roth IRA Early Withdrawal Question
Quick Question: I have a Roth IRA I have owned since 2002. It is currently valued at $25,000 and I have contributed a total of $12,000 over the life of the account. My last contribution was in 2008. If I were to withdrawal $10,000, would I have to pay tax on the withdrawal in addition to the 10% penalty tax? I think that I only owe the 10% penalty tax because I don’t qualify for an exception, but I don’t have to pay regular taxes because I am not taking out more than my total initial Roth contributions. Appreciate any feedback. Thanks!
Permalink Submitted by Alan - IRA critic on Sun, 2016-04-10 01:58
You do not owe tax or penalty for withdrawing your regular Roth contributions, and you can do that anytime. If your Roth was funded by a conversion instead of regular contributions, you owe a 10% penalty if you withdraw a conversion that you in the last 5 years. Does not sound like your Roth contains any such conversions.If your Roth holds 13k of gains, if you took out any of the gains (which come out last), you would owe both tax and penalty until you reach 59.5. Even though you do not owe tax, you still have to report your distribution on Form 8606, and you need to know how much you contributed because Form 8606 requests that info on line 22.
Permalink Submitted by Mike Mourouzis on Sun, 2017-03-19 02:06
Should I be filing a Form 8606 every year with the IRS if I have a Roth IRA and I am making monthly contributions?
Permalink Submitted by Alan - IRA critic on Sun, 2017-03-19 02:52
No. For a Roth IRA you only file an 8606 if you take a distribution before the Roth is qualified. Do not file the form to report regular Roth contributions, but you must file it if you do a Roth conversion.