Even though you only had this Roth IRA for 4 years, it's still possible that you have met the 5-year requirement for qualified distributions. The 5-year period for qualification begins on January 1 of the year for which you first made a Roth IRA contribution.
If the first year for which you made a Roth IRA contribution was 2018, any distribution you received in 2023 after reaching age 60 is a qualified distribution, free of any tax. For example, if on April 15, 2019 you made a regular Roth IRA contribution for 2018 to establish your first Roth IRA, the 5-year period started on January 1, 2018 and was completed on December 31, 2022. In that case your Roth IRA would satisfy the 5-year requirement after having been open for less than 4 years.
Being age 60 at the time of the distribution the Form 1099-R will typically have code T in box 7. 2023 TurboTax will ask if you had a Roth IRA before 2019, but it's really asking if you first made a Roth IRA contribution for some year prior to 2019. If your answer is Yes, TurboTax will treat code T the same as code Q for a qualified distribution.
You must click the Continue button on the page that lists the Forms 1099-R that you have entered, then, when TurboTax asks, enter your basis in Roth IRA contributions so that this value can be included on the required Form 8606 to calculate the taxable amount.
You will get a 1099-R at the end of January from the bank or broker. Enter that on your tax return. You may need to provide Turbotax with additional information such as the amount of your contributions and any previous withdrawals. Because the account was open less than 5 years, earnings are subject to regular income tax, but the withdrawal of contributions is not taxed. Because you are over age 59-1/2, there is no additional 10% penalty for early withdrawal.
You will receive a 1099-R. The TurboTax interview will help you calculate your tax liability for your earnings.
Even though you only had this Roth IRA for 4 years, it's still possible that you have met the 5-year requirement for qualified distributions. The 5-year period for qualification begins on January 1 of the year for which you first made a Roth IRA contribution.
If the first year for which you made a Roth IRA contribution was 2018, any distribution you received in 2023 after reaching age 60 is a qualified distribution, free of any tax. For example, if on April 15, 2019 you made a regular Roth IRA contribution for 2018 to establish your first Roth IRA, the 5-year period started on January 1, 2018 and was completed on December 31, 2022. In that case your Roth IRA would satisfy the 5-year requirement after having been open for less than 4 years.
Being age 60 at the time of the distribution the Form 1099-R will typically have code T in box 7. 2023 TurboTax will ask if you had a Roth IRA before 2019, but it's really asking if you first made a Roth IRA contribution for some year prior to 2019. If your answer is Yes, TurboTax will treat code T the same as code Q for a qualified distribution.
Thank you for your reply. Unfortunately, I am filing for 2022 so I have not had this Roth open for 5 years.
I did receive a 1099-R but when I entered the information into the TurboTax (and answered the questions) the result was a tax on the full distribution, not just the earnings.
Thank you for your response. I do realize that I will be taxed on the earnings, I just can’t get TurboTax to agree after entering the information from my 2022 1099-R
and answering the questions. The program insists on taxing the full distribution.
Thank you. I have the form as I am working on 2022.
What code or codes are shown in box 7? Did you put the code or codes into Turbotax correctly?
You must click the Continue button on the page that lists the Forms 1099-R that you have entered, then, when TurboTax asks, enter your basis in Roth IRA contributions so that this value can be included on the required Form 8606 to calculate the taxable amount.