Roth distribution taxes & penalty confusion

[user17610862872]

I got this from a 3rd party tax advisor and I am not sure it is correct. There also seems to be some confusion on his use of the terms contribution and conversion. This is for someone over 59 1/2. Please let me know you thoughts…

“If the first year you contributed to a ROTH IRA was in 2024, then you can't take any of the growth on your contributions out until 2029, otherwise you will pay tax and penalties.  For conversions, it is a different story.  If you converted $20,000 from a Traditional IRA or 401k to a ROTH IRA in 2024, you can't take either your contributions or growth out until 2029 or you'll incur tax (on growth of contributions if they are taken out) and/or penalties (on growth and contributions), if taken out before 1/1/2029.”

[Cindy4]

A non-qualified Roth distribution - because you didn't meet the 5-year rule - would cause any earnings withdrawn as part of the distribution to be taxed at your ordinary income tax rate.  If you are over 59 1/2, there is no penalty.  

Money contributed to a Roth is always taxed prior to the contribution and can be withdrawn tax free.

You pay income tax on the money, then put the net amount into the Roth IRA. (No tax deduction is taken). 

You convert pre-tax dollars into the Roth IRA, which creates a taxable event for that year, where the converted amount is added to your income and taxed.

Please take a few moments to read this great article.

Hope this helps!

Cindy