Buying and selling stocks in the Roth IRA has no tax impact at all.
Taking money out of the IRA is the only time it has tax impact, no matter what internal transactions generated the money.
If you are over 59-1/2 and the Roth has been opened at least 5 years, you can withdraw money from a Roth with no taxes or penalties.
If you are under 59-1/2, you can withdraw up to the amount of your original after-tax deposits in the account without tax or penalty. If you withdraw earnings, you will pay ordinary income tax plus a 10% penalty if you are under age 59-1/2 or if you are over 59-1/2 but the account is less than 5 years old.
For example, if you are 35, and funded the Roth IRA with $5000 of deposits, you can withdraw up to $5000 without penalty, no matter what the account is currently worth or how its investments performed. But if you funded your current account with $1000, and are closing it out, you will owe income tax plus a 10% penalty on the $500 of earnings, unless you are both over 59-1/2 AND the account is at least 5 years old.
This answer has been verified for accuracy by an Intuit expert employee
