topic Re: Roth IRA distribution after 5 yrs and disabled in Retirement tax questions

Roth IRA distribution after 5 yrs and disabled

JT-1002 — Fri, 20 Mar 2020 00:27:07 GMT

I am under 59 and took a Roth IRA distribution for the full amount. I had it for more than 5 yrs and I am permanently disabled.

Here is info from 1099-R:

1 Gross distribution $19,421.49
2a Taxable amount
2b Taxable amount not determined (X)
Total distribution (X)
....
7 Distribution code(s) J
IRA/SEP/SIMPLE ( )

Since I meet the criteria for the distribution to be penalty and tax free how do I enter the information so that happens.

Re: Roth IRA distribution after 5 yrs and disabled

ColeenD3 — Fri, 20 Mar 2020 17:46:41 GMT

Are you sure it is taxable? Look on Line 4b of your 1040.

A Roth with Code 7 in Box 7 would need an additional identifier.

Designated Roth account distribution. NOTE: If code B is in box 7 and an amount is reported in box 10, see the instructions for Form 5329.

Qualified distribution from a Roth IRA.

Re: Roth IRA distribution after 5 yrs and disabled

JT-1002 — Sun, 22 Mar 2020 17:47:32 GMT

Thank you for the response.

The total early distribution I took from this Roth IRA is not taxable and is penalty free because I had it for more than 5 year and the exception I have is that I am totally disabled.

The question I have is how do I enter the information in TurboTax for that 1099-R inorder for the application to recognize that?

The 1099-R has Code "J" in Box 7 and Box 10 is blank.

Re: Roth IRA distribution after 5 yrs and disabled

macuser_22 — Sun, 22 Mar 2020 18:04:07 GMT

@JT-1002 wrote:

Thank you for the response.

The total early distribution I took from this Roth IRA is not taxable and is penalty free because I had it for more than 5 year and the exception I have is that I am totally disabled.

The question I have is how do I enter the information in TurboTax for that 1099-R inorder for the application to recognize that?

The 1099-R has Code "J" in Box 7 and Box 10 is blank.

The 1099-R follow-up screen will ask about exceptions to the penalty - disabled is one of them.

Re: Roth IRA distribution after 5 yrs and disabled

DaveF1006 — Sun, 22 Mar 2020 18:23:39 GMT

Follow these directions explicitly and you will not owe taxable income or early withdrawal penalties.

After you enter all your 1099R information, there are many followup questions that occur.
Scroll through the many questions regarding the qualified disaster Distribution and continue until you reach a screen that asks "owned Any Roth for more than five years? Say yes
Go ahead and answer the next two answers truthfully and you will reach a screen that says"Enter your prior year's contributions. If you have been using turbo tax in past years, this will be populated.
As soon as you answer this question regarding basis, this will make your distribution non -taxable.
I see where you enter the amount of the distribution as a disability and that is the correct way to report this so you won't receive the early withdrawal penalty.

Re: Roth IRA distribution after 5 yrs and disabled

JT-1002 — Sun, 22 Mar 2020 18:55:40 GMT

Here are a few things I entered:

Owned Any Roth IRA for Five Years?
Yes

Were Any Roth IRAs Open on December 31, 2019?
No

Withdraw from Roth IRA Before 2019?
No

Enter Prior Year Roth Contributions
What should be entered here? 19,421?

...

Did you use your IRA to pay for any of these expenses?
Permanent disability: I entered my total amount of IRA distributions

Hope this helps.

Re: Roth IRA distribution after 5 yrs and disabled

macuser_22 — Sun, 22 Mar 2020 19:01:44 GMT

There should be no penalty on the 5329 form line 4.

Re: Roth IRA distribution after 5 yrs and disabled

DaveF1006 — Sun, 22 Mar 2020 19:03:35 GMT

Yes, whatever the balance of your Roth contributions as of 12/31/2018, is the amount that you will enter as a prior year's Roth contributions.

Re: Roth IRA distribution after 5 yrs and disabled

macuser_22 — Sun, 22 Mar 2020 19:15:57 GMT

@JT-1002 wrote:

Did you use your IRA to pay for any of these expenses?
Permanent disability: I entered my total amount of IRA distributions

Hope this helps.

If totally and permanently disabled then that overrides the previous contributions answer so what you enter as prior years contributions is immaterial . The disability will put the amount of distribution that you enter in the 5329 form line 2 with code "03" (disability) next to it to make it not subject to the penalty.