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I have a Roth IRA. if I close it, do I pay taxes on the

profit or on the whole...
I have a Roth IRA. if I close it, do I pay taxes on the profit or on the whole value at closing? I am closing it early. Do I pay penalty on the profit or on the value at closing?
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Answered in 5 minutes by:
11/6/2017
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,362
Experience: Certified Public Accountant
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Hi, my name is Mark. I will be happy to help you with your questions. Please give me a moment to prepare your response.

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How long have you had the account open for? You are correct that with a Roth you would pay taxes on the earnings. If you are under 59 1/2 you would pay a 10% penalty for an early distribution.

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Customer reply replied 1 month ago
The 10% penalty is on earnings or on full balance? I've had it since December 2008

The 10% penalty would be on the earnings. You are able to withdraw up to the amount of your contribution without any tax impact.

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Customer reply replied 1 month ago
if I withdraw less than initial contribution, I won't be assessed the 10% early withdrawal penalty?

Yes, as long as the contribution has been in the account for 5 or more years. If the distribution amount exceeds this amount then this is where the 10% penalty would apply.

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Customer reply replied 1 month ago
Thank you Mark. I will ask you a redundant question, just to be 100% sure. I deposited 10k in 2008 and never deposited anything else. The account is worth now 1300, but I want to withdraw only 9k. I understood I won't be taxed and I won't be assessed a 10% penalty. Please confirm

You are correct. There would not be a tax or penalty on withdrawing the $9k.

Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,362
Experience: Certified Public Accountant
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Category: Tax
Satisfied Customers: 2,362
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