dmertz
Level 15

Retirement tax questions

Since you are under age 59½, the amount of time that you have had a Roth IRA is largely irrelevant.  No matter how long you have had a Roth IRA, you can always withdraw any of your regular Roth IRA contributions without any tax or penalty.

 

The fact that you have had a Roth IRA for more than 5 years just means that what you reach age 59½ you can take any amount out of your Roth IRAs, including earnings, without any tax or penalty.

 

Code J is the code the will be in box 7 of the Form 1099-R reporting any regular distribution from a Roth IRA made before reaching age 59½.  Because the distribution will be a nonqualified distribution, your tax return must include Form 8606 to calculate the taxable amount of the distribution, which will be $0 if the distribution is no more than the amount of the regular contributions that were in your Roth IRAs.  With a taxable amount of $0, the distribution will not be subject to any early-distribution penalty.

 

(If your Roth IRA was funded with taxable Roth conversions, there is a different 5-year rule that applies where a distribution of amounts attributable to the taxable Roth conversion will be subject to the 10%  early-distribution penalty on that amount if distributed prior to the end of 5 years from the beginning of the year that you converted this amount to Roth and you are under age 59½.)

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