I recently sold and withdrew a portion of my Fidelity Roth IRA with the understanding that, if this is taken from the cost basis and not the gains, there is no tax penalty for early withdrawal. Yet, the transaction has been labeled "part premature distribution / no exception" in my Fidelity account. How can I specify that this sale was from the cost basis? Will Turbotax automatically do this when I file?
In a Roth IRA you can always withdraw your contributions at any time. As long as your withdrawal did not exceed your contributions to the IRA you should incur no tax. I think you'll have to wait until you get the actual 1099-R as I would expect it to have "Roth" specific codes.
There's a follow up interview in TurboTax that you'll need to go through (this comes up after the page titled "Your 1099-R Entries", not as part of the 1099-R entry itself) and you'll use that interview to inform TurboTax that the distribution is not taxable income.
I would expect the 1099-R form Fidelity to be coded J, Early distribution from a Roth IRA, since the transaction label you quoted indicates that you had not yet reached age 59 1/2.
For tax purposes, all Roth IRAs are lumped together. Because Fidelity has no way of knowing about any other Roth IRAs you might have or any withdrawals you may have taken from them, the 1099-R will also likely have box 2b checked, Taxable amount not determined. TurboTax will ask about your all of your Roth IRA contributions and withdrawals so that TurboTax can determine if the withdrawal is taxable, then report it on Form 8606 Part III accordingly. As long as your total withdrawals from your Roth IRAs have not exceeded your total contributions, this withdrawal will not be taxable.
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