1099-R TAxes

[ycain]

Do you have to pay taxes on a pretax account (Roth IRA) for an early distribution other than the 10% penalty? When entering the amount taking out the federal tax goes way high

Thanks

[macuser_22]

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One of the followup questions will ask for your prior year** contributions not previously withdrawn.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

Note: **Prior year - any current year Roth contributions should be entered into the IRA contributions section. They will not show up in the prior years contributions but will be accounted for on the 8606 form that calculates the taxable amount.

[DanaB27]

As macuser_22 mentions, you can always withdraw contributions that you made to your Roth IRA tax and penalty-free at any time.

But if you withdraw earnings it may also be subject to the 10% early-distribution penalty, and the money would be treated as income.

Qualified distributions from a Roth IRA are tax-free and penalty-free. The IRS considers a distribution to be qualified if it's been at least five years since you first contributed to a Roth IRA and one of the following conditions is met:

• Made when you're age 59½ or older.
• Taken because you have a permanent disability.
• Made by your beneficiary or estate after you pass away.
• Used to buy, build, or rebuild a home that meets the first-time homebuyer exception.
• $5,000 used towards the birth of a new child or adoption, within the first year.

Non-qualified distributions are any withdrawals that don't meet these guidelines. For these withdrawals, you'll owe taxes at your ordinary income tax rate and a 10% penalty.