SIMPLE IRA and Roth together
The contributions to Roth IRAs can be withdrawn at any time without taxes or penalties. Who is responsible to keep track of these contributions? In particular, a client came to us with an existing Roth and now wishes to withdraw the original contributions, which were contributed over multiple years. We are aware of the contributions to her Roth while being our client, however we do not know how much was contributed prior to becoming a client
Permalink Submitted by Alan - IRA critic on Fri, 2019-12-06 18:23
The taxpayer is responsible for tracking their basis in regular and conversion contributions, but most taxpayers do not have an organized system for doing do, so this is a common problem. If a non qualified distribution is made the amount of this basis must be entered on Form 8606 to report the distribution. Evidently, this client has some research to do. The contributions you know about can be withdrawn without tax or penalty, but determining the older contributions may be difficult. If they kept Form 5498 for these years they would know (adjusted for any excess contributions removed, any recharacterized contributions, or distributions shown on prior 8606 forms). Other potential sources are prior tax returns (if TIRA contributions were reported, they probably did not make Roth contributions that year), possible custodian account records (Fee might be required), or IRS transcripts, except that the IRS cannot provide these too many years back. Checking registers are another possible source.