Solved: If I took a Roth IRA distribution that was less than the amount I've contributed to it, shouldn't the distribution be tax-free?
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mmhaag00
New Member

If I took a Roth IRA distribution that was less than the amount I've contributed to it, shouldn't the distribution be tax-free?

I contributed $2000 in 2011 and $1000 in 2012. Withdrew $2500 in 2017. Form 1099-R shows distribution code J. When I work through TurboTax steps for this distribution it shows a 10% tax, so I must be misunderstanding one or more of the questions.
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Accepted Solutions
macuser_22
Level 15

If I took a Roth IRA distribution that was less than the amount I've contributed to it, shouldn't the distribution be tax-free?

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One of the followup questions will ask for your prior year contributions not previously withdrawn.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.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

4 Replies
macuser_22
Level 15

If I took a Roth IRA distribution that was less than the amount I've contributed to it, shouldn't the distribution be tax-free?

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.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

mmhaag00
New Member

If I took a Roth IRA distribution that was less than the amount I've contributed to it, shouldn't the distribution be tax-free?

I'm confused because it says to enter NET contributions. I'm interpreting this to mean that since I contributed $3000 total then withdrew $2500, I should enter $500 in this box.
macuser_22
Level 15

If I took a Roth IRA distribution that was less than the amount I've contributed to it, shouldn't the distribution be tax-free?

Net contributions means all prior Roth contribution *minus* any contributions previously withdrawn with other distributions.   If you have never had a distribution before, it would be the total of all contributions to any Roth account, if more than one account.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
mmhaag00
New Member

If I took a Roth IRA distribution that was less than the amount I've contributed to it, shouldn't the distribution be tax-free?

Okay. The wording on this and couple of the other follow up questions is very unclear. I did not get the "*minus* any contributions previously withdrawn with other distributions" part in the Learn More explanation.
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