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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
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Experience:  15+ years tax preparation and tax advice.
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im over 60 and moved money to a roth ira last year spreading

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i'm over 60 and moved money to a roth ira last year spreading the taxes over 2011 and 2012. can i take out any of the money now without a penalty?
Submitted: 6 years ago.
Category: Tax
Expert:  Wendy Reed replied 6 years ago.

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.


Hello there, if you withdraw from a converted Roth where you elected to spread out the income over 2011 and 2012, you may need to include more income in 2011, since the withdrawal will affect the amount of income to be reported in 2012 first.


The most that can be included in income because of the withdrawal of a conversion amount for any one year is the total amount required to be included in income for 2011 and 2012 minus the amounts included in income in all preceding years in the period.


For example, if you converted $10,000 in 2010, and are planning on reporting $5000 in 2011 and $5000 in 2012, ---and you want to withdraw $5000 in 2011, then you will need to report the entire amount as taxable in 2011.


See page 63 "later withdrawals from a Roth IRA"


Other than the tax on the income, there would be no additional penalty.

Customer: replied 6 years ago.
hi wendy, after reading p. 63 it appears that this is for year 2010 only... it doesn't say that if you take it out in 2011 then you have to claim the 2012 portion as income in 2011. am i reading this wrong?
Expert:  Wendy Reed replied 6 years ago.
The example that they give is for 2010 and they do discuss withdrawing in 2010, (I realize that they don't discuss withdrawals in 2011 or 2012)-- but if you follow the logic that a withdrawal will first reduce the taxable amount reported in 2012, if would follow that a withdrawal in 2011 will also reduce the taxable amount reported in 2012, which means it will increase the amount to be reported in 2011.
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