penalty/tax free withdrawal from Roth IRA

Submitted by Thomas Ferry on Thu, 2017-04-20 18:14

2012- tax payer converted $10k from TIRA to Roth
2013- $5500 backdoor conversion to Roth
2014- $5500 backdoor conversion to Roth
2015- $5500 backdoor conversion to Roth

how soon can the client withdraw each of these amounts without tax/penalty? if tax/penalty applies, how much would it be?

Separately, taxpayer made a non deductible contribution to TIRA 4/16. It has not appreciated. Can client withdrawal now without tax or penalty?



Submitted by Alan - IRA critic on Thu, 2017-04-20 19:06

  • There is no tax for distributing any of the above amounts, but the distribution of any earnings on the above will be taxable and subject to penalty until taxpayer reaches 59.5. If not yet 59.5, the 2012 conversion can be withdrawn without penalty because it has been held 5 years, the others would incur a 10% penalty on the pre tax portion of each conversion. For a typical back door Roth the conversions are mostly non taxable, but it depends on whether there were any other pre tax TIRA accounts.. The 2013 conversion will have completed 5 years on 1/1/2018 so that is another 5500 that can be distributed without penalty next January.
  • The non deductible TIRA contribution just made can be returned with tax only on the earnings on that contribution, which would be next to nothing.

Submitted by Thomas Ferry on Thu, 2017-04-20 19:25

thank youthe back door conversions were made from post tax contributions AND the tax payer did not have any other pre tax TIRA in existance during those back door conversions So, I presume all the contributions are accessible without tax/penalty?

Submitted by Alan - IRA critic on Thu, 2017-04-20 19:59

Yes, that is correct.

Add new comment

Log in or register to post comments