roth ira's

[dor1500]

a client has several 1099-R's for distributions from a Roth IRA box 2 taxable amounts are not filled in, how do i determine the taxable amount?

[AJsTax]

What is the code

in box 7? If not early there may not be any taxable amount.

[RitaB]

Find out the contributions

I am guessing this is an early withdrawal.

Contributions to a ROTH are never taxable (because they were not deducted from income), and contributions are withdrawn first (because that's how it is). See TTB chapter 13.

So, if your client contributed $15,000 to a ROTH and withdrew $10,000, no tax regardless of when it's withdrawn. If he withdrew $17,000, then $2,000 is taxable IF it's an early withdrawal. The $2000 will also be subject to 10% penalty unless an exception applies.

See instructions to Forms 8606 and 5329.

[dor1500]

early withdrawals and code J and code 1.

[Burke]

Make sure that is actually correct. I just had one where it was NOT an early withdrawal and was coded incorrectly because current custodian did not know. It had transferred from a previous brokerage.

[RitaB]

Absolutely

Make sure that is actually correct. I just had one where it was NOT an early withdrawal and was coded incorrectly because current custodian did not know. It had transferred from a previous brokerage.

Burke is so right. Frequently the codes are not correct. Gives us lots of venting material on here. And Form 5329. I have three clients whose code is always wrong. One is in his seventies, and it still has the early distribution code every year.