Distribution From Roth

[gman]

Client took a distribution from his Roth. Approx 15,000. Box 7 shows code J only.

Taxpayer states earnings less than one dollar. So if all distribution was what he contributed, there should be no tax or penalty?

[JohnH]

He should be able to produce documentation showing when he purchased the Roth. I'd want to see that.

[Gretel]

Yes, I agree. You also will need to know if he opened his first ROTH IRA account more than 5 years ago. There could be a possible penalty.

[Gene V]

Yes, I agree. You also will need to know if he opened his first ROTH IRA account more than 5 years ago. There could be a possible penalty.

Gretel,
That's what I like about a Roth IRA--you can withdrawn tax-free your basis without
waiting for 5 years or age 59 1/2.

Example: Ben creates a Roth IRA by contributing $3,000 a year for three years. Regardless of Ben's age or whether the five-year test has been met, Ben can withdraw $9,000 ($3,000 x 3) from the Roth IRA on a tax-free basis.
He will file Form 8606 to reflect the distribution and show that it is not more than his total Roth IRA contributions.
From IRA and Retirement Plan Handbook.

Gene

[Gretel]

I agree, Gene, as long as if the account doesn't meets the 5-year test none of the distribution comes from a conversation.