Permalink Submitted by Alan - IRA critic on Sat, 2019-02-23 17:26
The distribution may or may not be taxable under the Roth IRA ordering rules. If the distribution is less than the balance of regular contributions ever made to the Roth (and not withdrawn earlier), it will be tax free. Regular contributions can be distributed anytime without tax or penalty. Conversions come out after regular contributions tax free, but with a penalty if held under 5 years. Earnings are subject to tax under the Roth is qualified and subject to penalty unless a penalty exception applies. In short, you must keep track of the composition of your Roth IRA to be able to report distributions on Form 8606, which determines if the distribution is taxable or not.
Permalink Submitted by Alan - IRA critic on Sat, 2019-02-23 17:26
The distribution may or may not be taxable under the Roth IRA ordering rules. If the distribution is less than the balance of regular contributions ever made to the Roth (and not withdrawn earlier), it will be tax free. Regular contributions can be distributed anytime without tax or penalty. Conversions come out after regular contributions tax free, but with a penalty if held under 5 years. Earnings are subject to tax under the Roth is qualified and subject to penalty unless a penalty exception applies. In short, you must keep track of the composition of your Roth IRA to be able to report distributions on Form 8606, which determines if the distribution is taxable or not.