Have a Tax Question? Ask a Tax Expert
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
How old were you when you took the distribution from the Roth IRA, and for what purpose did you take the distribution?
Distributions are tax free only if they are qualified distributions
A qualified distribution meets both of the following two categories of requirements: 1. It occurs at least five years after the Roth IRA owner established and funded his or her first Roth IRA 2. It is distributed under one of the following circumstances:
I was 38. I was under the impression that I could withdraw contributed amounts as long as I didn't withdrawl profits.
No, it has to be a qualified distribution. You have to make the distribution at least 5 years after you set up your first Roth IRA
and it has to be under one of the qualified reasons
Was the amount you took out your contributions to the plan?
So I am taxed at the full income tax rate and not the capital gains rate
If so, those can be taken tax free at any time
Your original contributions can be taken at any time
Yes, it was out of the contributions to the plan.
Under the ordering rules, then you shouldn't owe tax on this amount. You will need to respond to the message and tell the IRS that your distribution was from participant contributions to the plan
That is what I thought. Is that the language I should use on the response?
Yes, include a copy of your 1099-R
Should the 1099-R have to have that language..I think it just says I took a withdrawal?..thanks for your help BTW
No problem. The 1099-R is just for their information. They will want to see it.
I am trying to rate you but it won't let me
Oh I'm sorry I had a setting on
When I am just talking, I have it set so you can't until we're done. but, I believe if you are satisfied we are complete.
I turned it off you can rate now.
Okay..thanks again. XXXXX Glad I googled this
Here's a good article to read on the topic, too; http://www.investopedia.com/articles/retirement/04/042804.asp
Glad you stopped by too