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Roth IRA Withdrawals

There are three potential parts to the balance of your Roth IRA; the contributions you made, any contributions made as a result of a conversion, and the earned money made by the investments in the account. The contributions you have made can be withdrawn at any time. Since you have already paid taxes on those funds, it does not count as earned income and is not taxed at the end of the year. If you continue to withdrawal beyond the amount of your contributions, the funds may be taxed a 10% fee if they are not considered qualified distributions. Once the initial contributions have been distributed, the IRS considers the next distribution part of any converted funds you may have contributed. Distribution of converted funds in less than five years of the conversion is not considered a qualified distribution. Finally, your earnings on your contributions are the last funds to be distributed once your contributions and converted funds are exhausted.

Roth IRA Withdrawal Chart

Roth IRA Qualified Distributions

In order to withdraw funds (other than contributions) and have them not count towards your gross income, they must meet several requirements to be a Qualified Distribution. A distribution is qualified if it is made 5 years after you first contributed to your Roth IRA and it occurs after you reach age 59 1/2. Additionally, if the distribution is made because you are disabled or is for a first home, the distribution is considered qualified. Distributions that are not qualified are subject to a 10% tax.


Qualified Distribution Process
From IRS Publication 590: Individual Retirement Arrangements

Qualified Distribution Exceptions

In order to withdraw qualified distributions from your Roth IRA without tax penalties, you must meet one of several requirements.

  • You are age 59 ½ or older
  • You are disabled
  • You are the beneficiary of a deceased IRA owner
  • You will use the distribution for a first-time homebuyer program
  • You have significant unreimbursed medical expenses
  • The distribution is part of a series of substantially equal payments
  • You are paying medical insurance premiums after losing your job
  • The distribution is not more than your higher education expenses
  • The distribution is a result of an IRS levy of the qualified plan
  • The distribution is a qualified reservist distribution

Next: Learn how a Roth IRA fits into your overall portfolio
Page last modified 2/3/2012