Roth contribution distribution

Submitted by Sanjay Jain on Thu, 2023-02-16 15:18

According to multiple articles you can take your Roth contributions at any time without penalties. It is only the gains/earnings that have restrictions. For example:

https://www.investopedia.com/roth-ira-withdrawal-rules-4769951 – Yes, you can withdraw your own contributions from your Roth IRA at any point, penalty-free, regardless of your age. You cannot withdraw the earnings on those contributions before you retire tax- and penalty-free until you turn 59½ and you’ve had the account open for at least five years.

If this is the case, would a 1099 be issued? If yes, what code should be used in Box 7



Submitted by Alan - IRA critic on Thu, 2023-02-16 16:41

A 1099R is issued for all Roth IRA distributions, but if the Roth IRA is qualified the distribution is only reported on line 4a of Form 1040. Nothing goes on 4b which is the taxable line, and Form 8606 is not needed. A 1099R for qualified Roth distributions is either coded Q for qualified or Code T if the custodian knows you are over 59.5 or disabled but does not know if you have held any Roth account for 5 years. 

Submitted by David Mertz on Thu, 2023-02-16 16:43

  • Yes a Form 1099-R is issued for any Roth IRA distribution.  If the individual is under age 59½ the Form 1099-R will have code J.  If over age 59½, the Form 1099-R will have code T or, if the Roth IRA custodian knows that the individual has had the account for at least 5 years, code Q.
  • Regardless of with code is present, the gross amount of the distribution must appear on line 4a of Form 1040 and, if any portion of the distribution is a distribution of taxable gains, the taxable amount must appear on line 4b.
  • A distribution reported with code J will need to be reported on Form 8606 Part III to determine the taxable amount, taking into account the individual’s basis in Roth IRA contributions and conversion.  A distribution reported with code T will similarly need to be reported on Form 8606 if the individual has not completed the 5-year period for qualified Roth IRA distributions.  A distribution reported with code Q is not reportable on Form 8606, just on Form 1040.

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