Retirement tax questions

As a follow-up, a distribution from a Roth where the 5-year rule has not been met, but for other reasons, such as being inherited, the 10% early withdrawal penalty does not apply, or the beneficiary is 598.5 or older, is still a "Non-Qualified Distribution" so one needs to know how to apportion or allocate the monies received between what is non-taxable and what is taxable.

The "ordering rules" for IRA distributions, Traditional or Roth or otherwise, specify that the monies coming out in a withdrawal are:

1. First, the "basis" - being the monies on which taxes have already been paid:
1. non-deductible contributions made, or
2. funds contributed to a Roth as a result of a Conversion of a taxable IRA to a Roth IRA
2. Then the income generated within the account, and on which taxes have not been paid.

In the specific case of a Roth IRA which does not meet the 5-year rule, and is Non-Qualified, but in other respects is not subject to other penalties, if one withdraws a small proportion of the total account value, it would typically be the case that the monies might be all basis and so no tax is imposed.  This means that you, the account holder need to keep track of two amounts:

1. The total monies paid in (contributed) on which taxes have already been paid - from non-deductible contributions or from a conversion to a Roth
2. The total monies withdrawn by distribution.
3. So long as, after the year's distributions are made, the Total #1 is still greater than the Total #2, the monies distributed are not subject to taxation.

Note that State-level taxation is a separate topic, and totally state-dependent.