Qualified Roth Distributions

[agawam27]

I am 60 years old and have a single Roth IRA that was established 30 years ago.

This Roth consists of Contributions, Rollovers, Nondeductible conversions, TIRA conversions (the most recent TIRA conversion was completed in 2019).

If I withdraw ALL funds from my Roth IRA this year (2020):
1. Is it considered a Qualified Distribution and I won’t have to pay any taxes or penalties?
-OR-
2. Will I have to pay taxes and/or penalties on any of the more recent conversions (including the 2019 TIRA conversion)?
3. Will I have to pay taxes and/or penalties on the Earnings in this Roth?
4. Will I need to complete a Form 8606 since I did make Nondeductible conversions?
5. Where would I include information about this withdrawal on my 1040 tax return?

Thanks so much!

[Alan S.]

Since Roth IRAs were first available in 1998, the oldest your Roth IRA could be is 22 years. Nonetheless, if your first legal Roth contribution was prior to 2016, your Roth is now fully qualified and tax free.

1) No tax or penalty since the distribution is qualified. You do not need to report it on Form 8606, just directly on line 4a of Form 1040.
2) No
3) No
4) Not for the distribution, but you will for the conversion on your 2019 return.
5) Line 4a only, nothing on 4b.

Hopefully, you do not have to take a large Roth distribution, since leaving the Roth balance alone will continue to generate non reportable tax free earnings for life.

[agawam27]

Thanks for the GREAT info Alan! … and sorry for the typo. My Roth IRA is 20 years, not 30 years old.

[agawam27]

One more follow-on question (sorry).

If I take a PARTIAL (instead of FULL) distribution from my Roth IRA:

1. I’m assuming, per your previous response, it would still be a Qualified Distribution (no taxes or penalties) since I’m over 59 1/2 years old and my “first legal Roth contribution was prior to 2016“.
2. I’m also assuming, per your previous response, I would reflect this Partial distribution on Line 4a of my 1040 (nothing on 4b.)
3. However, would I now need to complete Form 8606 since it is for a Partial (not Full) distribution?
4. And if Form 8606 is needed, does it matter what the Partial distribution includes? i.e. Contributions only, Conversions/Rollovers only, or only Roth Earnings?

Thanks again!

[Alan S.]

1 and 2) Yes, you are correct.
3 and 4) No 8606 required, as the distribution is still qualified, even though partial. No breakdown needed.

[Author]

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