Dividends in Roth

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Mr.BB
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Joined: Sun May 08, 2016 10:10 am

Dividends in Roth

Post by Mr.BB »

Normally I have any dividends that our mutual funds in our Roth accounts be reinvested into the their funds. When we eventually retire and we want to use those dividends as a income source instead of reinvesting back into the Roth accounts, are those dividends treated as income or are they tax-free income?
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
Silk McCue
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Joined: Thu Feb 25, 2016 7:11 pm

Re: Dividends in Roth

Post by Silk McCue »

By definition the Roth account is non taxable upon withdrawal. Period end of story. You will never pay taxes on any withdrawal from your Roth as long as you have satisfied the holding rules for Roths aged less than 5 years and before 59.5.

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Topic Author
Mr.BB
Posts: 1505
Joined: Sun May 08, 2016 10:10 am

Re: Dividends in Roth

Post by Mr.BB »

Silk McCue wrote: Wed Jan 13, 2021 7:20 am By definition the Roth account is non taxable upon withdrawal. Period end of story. You will never pay taxes on any withdrawal from your Roth as long as you have satisfied the holding rules for Roths aged less than 5 years and before 59.5.

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Thank you.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
Hyperchicken
Posts: 521
Joined: Mon Mar 02, 2020 5:33 pm

Re: Dividends in Roth

Post by Hyperchicken »

I believe Roth IRA distributions always come out of basis first, so as you take them, basis will decrease, and dividends are included into earnings that will increase. This has no material impact in retirement. Before retirement there is penalty for taking out anything beyond basis. Distributions are not taxed either way.
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