Backdoor Roth early distribution
I created a backdoor Roth by creating and funding a non-deductible IRA and then converting the whole amount to a Roth IRA. I didn’t have any other Traditional IRAs and there were no earnings in the non-deductible IRA. If I withdraw the converted amount before five years when I am under 59 ½ will there be a 10% penalty? Thanks.
Permalink Submitted by David Mertz on Tue, 2023-12-26 13:51
Only the taxable portion of a distribution is potentially subject to an early-distribution penalty. The distribution of the converted amount is not taxable and therefore not subject to penalty. Under the Roth IRA ordering rules, the converted amount comes out before any earnings in the Roth IRA come out.