I had a myRA retirement account, a program the government decided to phase out. How do I avoid the retirement account withdrawal penalty?

[dmertz · Accepted solution]

A myRA is nothing more than a Roth IRA with a limited investment choice.  Like any Roth IRA, you can take a distribution of your original contributions tax and penalty free.  Since the distribution was a nonqualified distribution the distribution must be reported on From 8606 to determine the taxable amount of the distribution.

In TurboTax, enter the Form 1099-R exactly as received under Wages & Income -> Retirement Plans and Social Security -> IRA, 401(k), Pension Plan Withdrawals (1099-R) and answer the immediate follow-up question.  After entering all of your Forms 1099-R, click the Continue button on the Your 1099-R Entries and, when TurboTax asks, enter the net amount of you Roth IRA (including myRA) contributions and, if any, Roth conversions.  TurboTax will automatically prepare Form 8606 Part III to calculate the taxable amount of the distribution

[SweetieJean]

You could have kept the plan open, or rolled it to an IRA within 60 days.

https://myra.gov/about/

[Critter]

Even though the plan was shut down you could have rolled it to another IRA within the 60 day window ... if you didn't then it is taxable and subject to the 10% penalty unless you have an exception.  The program will help you find one if you qualify for one and sorry, but the program being closed is not an exception.