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Retirement tax questions

If  the Roth (and that is ANY Roth you own) was open for less than 5 CALENDAR years (and assuming you are under 59.5 years old, the 10% penalty would only occur under the following circumstances: 

 

The IRS assumes that dollars distributed from a Roth IRA follow this order

1) Original contributions - there is never 10% penalty on this bucket of money.  Once this bucket is totally distributed, then

 

2) Conversion contributions  are distributed - these are dollars that were converted from a Trad IRA.  THere is a 10% penalty on these dollars that were disributed.  Once this bucket is totall distributed, then

 

3) Earnings are distributed.  There is a 10% penalty on these dollars. 

 

While the rules are complex, the ones I stated in 1), 2) and 3) presume ANY Roth you own has been opened for less than five CALENDAR years and you are under 59.5 years old.  The rules may differ under other permutations. 

 

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