Roth 401K

Forum|Forum|6 years ago
January 21, 2020
2 replies
18 views

I am 66 years old and retired. I withdrew/closed out my Disney Roth 401K account. Do I owe taxes on the amount I received. I thought Roth 401K money was tax free.

Best answer by SusanY1

You should not owe taxes on the income withdrawn from your Roth IRA as long as it has also been at least 5 years since your first contribution to the account

For a Roth IRA or Roth 401(k) withdrawal to be entirely tax-free you must be over the age of 59 1/2 and meet the 5-year holding requirement.

Even if your Roth IRA distribution is tax-free, you should enter the information provided on your 1099-R into TurboTax. The code in Box 7 of form 1099-R will tell TurboTax how to treat the income.

Qualified Roth IRA/401(k) distributions will have code "Q" in Box 7 of Form 1099-R.

Bsch4477

Level 15

Contributions and earnings in a Roth 401(k) can be withdrawn without paying taxes and penalties if the account owner at least 59½ and has held their Roth 401(k) account for at least five years.

Rmock3Author

Level 2

I have had the Roth 401K for 6 years. When I add the 1099R info into turbo tax, it indicates the money was taxed

SusanY1

Level 15

Does your 1099-R have "Q" in Box 7? If your form is marked this way, double-check that it is also entered this way in TurboTax.

Then, follow these steps to verify if the income is being reported as non-taxable on your tax return:

Login to your TurboTax account at TurboTax.com.
Click on Tools in the menu on the left-hand side of the screen (Note: if you do not see Tools first click on Continue where I left off or Take me to my return).
Click on Tax Tools.
Click on Tools.
In the menu that pops up, click on View Tax Summary.
With the summary on the screen, click on Preview My 1040, in the left menu panel.
Scroll down to review the tax form. Check to see if the Roth distribution is included on line 4d as taxable. If the income is being treated properly you will see the distribution amount on line 4c, but it will not be included in the amount on line 4d.

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SusanY1Answer

Level 15

You should not owe taxes on the income withdrawn from your Roth IRA as long as it has also been at least 5 years since your first contribution to the account

For a Roth IRA or Roth 401(k) withdrawal to be entirely tax-free you must be over the age of 59 1/2 and meet the 5-year holding requirement.

Even if your Roth IRA distribution is tax-free, you should enter the information provided on your 1099-R into TurboTax. The code in Box 7 of form 1099-R will tell TurboTax how to treat the income.

Qualified Roth IRA/401(k) distributions will have code "Q" in Box 7 of Form 1099-R.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Rmock3Author

Level 2

Block 7 code is a "B" , not a "Q".

Bsch4477

Level 15

That code is a designated Roth withdrawal.

Unlike pre-tax elective deferrals, the amount employees contribute to a designated Roth account is includible in gross income. However, distributions from the account are generally tax-free, including previously untaxed earnings in the account.