6 Rules for Tax-Free Roth IRA Distribution
Monthly IRA Updates
 
image
 
image
 

6 Rules for Tax-Free Roth IRA Distribution

By: Sarah Brenner, JD
IRA Analyst

Jeremy Rodriguez

Roth IRAs offer a trade-off. You decide to pay taxes now on your contribution (or conversion) in exchange for tax-free earnings down the road. Don’t miss out on Roth IRA benefits by making mistakes when you take a distribution. Here are six rules you need to know to make sure money comes out of your Roth IRA tax-free.

1. Aggregate your Roth IRAs. For tax purposes, all of your Roth IRAs are considered one Roth account. There is no tax benefit gained by keeping conversions in a separate Roth IRA from your contributions. This is sometimes called the aggregation rule.

2. Follow the ordering rules. Funds leave your Roth IRAs in a certain order. Contributed amounts are distributed first. Converted amounts are distributed next, first in, first out. Last out would be earnings.

 
image
 
 
image
image
image
image
 
image
 
image
 
 
image
 
Instant IRA Success
 
image
 
Instant IRA Success
Facebook   Twitter   LinkedIn   YouTube
 

Ed Slott and Company, LLC 100 Merrick Road -- Suite 200 E Rockville Centre, New York 11570 United States (516) 536-8282