Roth IRA distributions of your original contributions aren’t taxable; however, earnings or interest on those contributions can be taxable if either of the following are true:
- You didn’t have your Roth IRA for five years before taking the distribution.
- It’s an early withdrawal (before age 59 1/2) without an exception for death or disability.
The code in Box 7 of your Form 1099-R identifies your distribution and its tax treatment:
- Code Q means it’s not taxable because you met the requirements for a tax free distribution.
- Code J means that you met the five year holding period, but because this was an early withdrawal without any known exceptions, the earnings are taxable and a 10% early distribution penalty may also apply.
- Code T means that an exception applies to your early withdrawal, but it’s unknown if you met the five year holding period. If the holding period is not met, then the earnings will be taxable.
Follow this link if you’d like help entering your 1099-R.