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Discussion Forum Index --> Tax Questions --> ROTH distribution
Ckmcpa (talk|edits) said:
| 1 March 2006
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| Client is <59 1/2. He contributed $2,000 into ROTH in 2002 for 2001. In 2005 he withdrew $2103. How much is subject to income tax and the 10% early withdrawal penalty? My tax program is telling me it's the whole thing. ?????
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Riley2 (talk|edits) said:
| 1 March 2006
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| If this is the only Roth he owns, then the answer is $105.
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Solomon (talk|edits) said:
| 2 March 2006
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| True, he meets the age requirement. However, he did not meet the 5 year requirement so software is probably right. One of the requirements according to Pub. 590 is the distribution must be made "...after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA...".
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Bean (talk|edits) said:
| 2 March 2006
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| I agree with Solomon on the 5-year period. It is the whole thing.
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Gardner (talk|edits) said:
| 3 March 2006
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| This is a non-qualified distribution, but the ordering rules apply. No amount is included in gross income until all the afer-tax contributions have been distributed. So only $103 is subject to tax and 10% penalty. Possibly you did not enter the basis into the program, so it thinks the whole thing is taxable.
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Solomon (talk|edits) said:
| 3 March 2006
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| Stand corrected. After looking at the worksheet in Pub 590 for non-qualified distributions, I see only 103 is taxable.
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