topic @dmertz in Retirement tax questions

Should we be taxed on a Roth IRA distribution used to pay for my son's college if the last contribution was over 7 years ago?

dmking30 — Sat, 01 Jun 2019 21:16:09 GMT

If you are under age 59½, whether or not the distribution...

dmertz — Sat, 01 Jun 2019 21:16:10 GMT

If you are under age 59½, whether or not the distribution from the Roth IRA is taxable depends on your basis in Roth IRA contributions and conversions. Make sure to click the Continue button on the Your 1099-R Entries page and tell TurboTax the amount of your Roth IRA contribution basis for years prior to 2018 and any basis in Roth conversions. TurboTax will prepare Form 8606 Part III to calculate the taxable amount of the Roth IRA distribution.

Even if a portion of the distribution is taxable, as long as the taxable amount does not exceed the higher education expenses for the year.

Probably not. But you may have to pay a penalty on your...

bvmbvm — Sat, 01 Jun 2019 21:16:10 GMT

Probably not. But you may have to pay a penalty on your IRA contributions for the same year. Turbo Tax may be projecting the penalty ( not a tax) if your Adjusted Gross Income in 2018 is above a certain limit.

So are you saying that I could have to pay a penalty on m...

dmking30 — Sat, 01 Jun 2019 21:16:11 GMT

So are you saying that I could have to pay a penalty on my 401k contribution this year for using a separate Roth IRA to pay his tuition? If not, I need to know how to get that corrected in TurboTax so I am not paying a penalty. Please advise.

@dmertz

VolvoGirl — Sat, 01 Jun 2019 21:16:12 GMT

@dmertz

I assume your 401k and your Roth IRA are two separate fun...

bvmbvm — Sat, 01 Jun 2019 21:16:12 GMT

I assume your 401k and your Roth IRA are two separate funds. If your contributions to your Roth IRA are over a certain amount AND if your Adjusted Gross Income is over a certain amount, there is a penalty on the contribution to the Roth IRA. In Turbo tax see the IRA Contribution worksheet and IRA information worksheet.