Roth distributions in year of turning 59 1/2
Taxpayer has a Roth IRA which she has held for more than 5 years but has not turned 59 1/2. She has been taking distributions for the past 2 years and in this time, she has used up all of her basis (happened during 2019). She turns 59 1/2 next month. My understanding is that the distributions for Jan – Aug 2020 would be fully taxable and subject to a 10% penalty. Am I correct?
Permalink Submitted by Alan - IRA critic on Fri, 2020-08-28 21:56
Yes, that is correct. She should get a separate 1099R for distribution prior to 59.5 and another for those 59.5 and later. Those prior to 59.5 must be reported on Form 8606 as well as 4a and 4b of Form 1040, and for those afterwards when the Roth is qualified should not be included on the 8606, just directly on line 4a of Form 1040.
Permalink Submitted by B Smith on Fri, 2020-08-28 22:01
Sometimes you just need another brain. Thanks again.