Roth Distribution

[TAX]

Client got distribution from Roth IRA.

He closed out Roth IRA completely in 2007

1991: Opened Traditional IRA
1998: Complete Conversion to Roth IRA
2007: Complete Distribution from Roth IRA

(1) Any impact of Conversion in 2007?

(2) 1998 conversion now considered contribution for Roth as taxes were paid at the time of conversion. Does this sound right?

(3) Loss on Roth IRA?

(4) Fees paid for distribution?

(5) Contribution/Basis: Will go on 8606 and will not be taxable

[KJ Judd]

1. Now treated as Roth contribution.
2. Yes.
3. Maybe.
4. I've never seen this.
5. Correct.

[Roland Slugg]

I agree with KJ Judd's responses above, with the following added clarifications:

1. KJJ: Now treated as Roth contribution. RS: Agree. 2007 is unaffected by the 1998 conversion.
2. KJJ: Yes. RS: Agree.
3. KJJ: Maybe. RS: If the amount received from the Roth in 2007 was less than the total of all contributions (regular plus conversions) minus prior withdrawals, if any, the difference is deductible on Schedule A, subject to the 2% floor, if the T/P itemizes his deductions.
4. KJJ: I've never seen this. RS: IRA trustee fees are also deductible on Schedule A, subject to the 2% floor.
5. KJJ: Correct. RS: Agree. Report the 2007 distribution on F-8606. If there was a net gain, and the T/P was over 59½, it is not taxable. If he was under 59½, the gain is taxable AND subject to the 10% penalty.