Back door Roth IRA Account and Regular Roth same account
I had a backdoor Roth IRA account and I have been contributing in same account every year (but regular Roth). If I am not wrong Backdoor Roth principal can not be touched for five years but principal in regular can be taken out anytime. If in case I need to take out principal (not growth) there will be a separate rules. Can I say I want to take out from Regular Roth Contribution or different rule applies (first contribution first to take out)?
Thanks
Narayan
Permalink Submitted by Alan - IRA critic on Sat, 2016-04-30 23:00
Non qualified Roth distributions must follow “ordering rules”. First out is your regular Roth contributions tax and penalty free. Next out are your conversions, oldest first. A back door Roth conversion is nearly entirely non taxable and since the 10% penalty only applies to the pre tax portion of a conversion done less than 5 years back, distribution of this money will be tax and penalty free except for any small amount of earnings included in the conversions. Tracking of these components of your Roth IRA is your responsibility, and the custodian has no role in this. To report the distribution on Form 8606 you need to know your balances in regular and conversion contributions, which year you did the conversions and the breakdown between the taxable and non taxable portions of each conversion done in the last 5 years.