Can I withdraw my initial Roth IRA investment without tax penalties as a 53 year old who lost his job due to pandemic. I want to avoid penalties

[gavin-nmi-pierce]

I started the Roth IRA account more than 5 years ago through my employer at the time. It has been moved to Betterment

[macuser_22]

If you rolled an employer designated Roth 401(k) to a Roth IRA then you should have a statement that shows your own contributions to the plan of the 1099-R for the distribution that was rolled over in box 5 that also shows it.

You can always withdraw your own Roth contributions tax and penalty free.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

One of the followup questions will ask for your prior year** contributions not previously withdrawn. Those contributions that still remain in the Roth will not be taxed or subject to a early withdrawal penalty. That will add a 8606 form to your tax return with the Roth contribution and tax calculation in part III.

Note: **Prior year - any current year Roth contributions should be entered into the IRA contributions section. They will not show up in the prior years contributions but will be accounted for on the 8606 form that calculates the taxable amount.

[gavin-nmi-pierce]

I originally had this Roth IRA through my employers roughly 20 years ago. I rolled into into Schwab account and a few years later I moved it to Betterment. I don't have these tax documents as they were lost in a fire. Any suggestions as to where I would find these documents......past employer, Schwab etc. I know roughly what I put in, but not sure how to prove it?

[macuser_22 · Accepted solution]

You can't have an IRA through an employer.    You had an employer plan such as a 401(k) or a 401(k) Roth (Designate Roth) that is NOT an IRA.

Neither Schwab or Betterment. would know your "basis" in the employer plan.     Only your documents from the employer plan will show that.  

You can claim the basis to the best of your knowledge,  but if the IRS questions it, (which is unlikely)  then they will want written proof such as your last employer 401(k) account statement.

However, if you took the distribution in 2020 because of COVID, then under the CARES act there is no penalty reguardless of age.  When entering a 2020 1099-R answer yes to the COVID related questions.

[gavin-nmi-pierce]

Understood, and you are correct, this was in fact a 401K that I rolled into a Roth when I left. I will track down the records from when I left that company. I didn't anticipate this issue to last as long into 2021 so this would be happening after the 2020 calendar year and outside the government relief. thanks again, much appreciated.