early withdraw of Roth IRA - Tax form questions

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emh
Posts: 13
Joined: Sun Dec 12, 2010 8:01 am

early withdraw of Roth IRA - Tax form questions

Post by emh » Mon Apr 16, 2018 4:00 pm

Hi -

I'm really hoping someone can help me.

Last year, I withdrew money from my Roth IRA (I'm 49 years old).

The money in my Roth IRA was originally in a traditional IRA but I converted it over into a Roth IRA.

The money that I withdrew comes from the conversion (not from any earnings) and has been held for over 5 years.

As I understand it, since I held the money for over 5 years, I do not have to pay the early withdrawl penatly.

But I'm confused about the tax forms. Do I fill out the 8606 and the 5329? Or just one of them?

Most importantly, how do I fill this form(s) out? What am I supposed to enter to indicate that the money was converted from a traditional IRA and held for 5+ years? I've looked at these forms and am very confused.

Thanks in advance!

Ed

Silk McCue
Posts: 960
Joined: Thu Feb 25, 2016 7:11 pm

Re: early withdraw of Roth IRA - Tax form questions

Post by Silk McCue » Mon Apr 16, 2018 5:41 pm

I have no direct knowledge but I did some research and this link seems to provide an answer to your question.

https://pocketsense.com/report-ira-dist ... 82280.html

Cheers

retiredjg
Posts: 32944
Joined: Thu Jan 10, 2008 12:56 pm

Re: early withdraw of Roth IRA - Tax form questions

Post by retiredjg » Mon Apr 16, 2018 6:21 pm

You need to fill out Part III of Form 8606, using the worksheet you'll find in the instructions. I don't see why you would need the other form.

emh
Posts: 13
Joined: Sun Dec 12, 2010 8:01 am

Re: early withdraw of Roth IRA - Tax form questions

Post by emh » Mon Apr 16, 2018 6:43 pm

Silk McCue wrote:
Mon Apr 16, 2018 5:41 pm
I have no direct knowledge but I did some research and this link seems to provide an answer to your question.

https://pocketsense.com/report-ira-dist ... 82280.html

Cheers
Thanks was looking at that iink earlier today but my brain was too fried to make sense of it. I'll take a look at it again tomorrow.

emh
Posts: 13
Joined: Sun Dec 12, 2010 8:01 am

Re: early withdraw of Roth IRA - Tax form questions

Post by emh » Mon Apr 16, 2018 6:51 pm

retiredjg wrote:
Mon Apr 16, 2018 6:21 pm
You need to fill out Part III of Form 8606, using the worksheet you'll find in the instructions. I don't see why you would need the other form.
Thanks, but I'm a bit confused about how to fill out Part III. It seems that I need to calculate the "basis". But when I look at the instructions (page 12), I see the following:

"Note. Don’t complete this worksheet if you never received a distribution from your Roth IRAs prior to 2017."

2017 was my first year receiving a distribution. So what do I do to calculate the basis since I never received a Roth distribution prior to 2017?

https://www.irs.gov/pub/irs-pdf/i8606.pdf

EDIT: The more I look, the more confused I get, I don't see anywhere that I can indicate that the money I withdrew was from a Roth conversion that took place more than 5 years ago.

Alan S.
Posts: 7615
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Location: Prescott, AZ

Re: early withdraw of Roth IRA - Tax form questions

Post by Alan S. » Mon Apr 16, 2018 7:58 pm

If your only Roth contribution was the conversion, and you never made a regular Roth contribution, then you have nothing to enter on line 22 of Form 8606. On line 24 enter the total amount you converted to your Roth IRA. Perhaps there was just the one. Of course, you will enter your distribution on line 19 and 21.

If the conversions were equal or greater than the amount of your distribution (reported on J coded 1099R), enter 0 on 25a. There will be no tax or penalty on your distribution. Enter the amount of the distribution ONLY on line 15a of Form 1040. You do not need Form 5329.

emh
Posts: 13
Joined: Sun Dec 12, 2010 8:01 am

Re: early withdraw of Roth IRA - Tax form questions

Post by emh » Tue Apr 17, 2018 8:18 am

Alan S. wrote:
Mon Apr 16, 2018 7:58 pm
If your only Roth contribution was the conversion, and you never made a regular Roth contribution, then you have nothing to enter on line 22 of Form 8606. On line 24 enter the total amount you converted to your Roth IRA. Perhaps there was just the one. Of course, you will enter your distribution on line 19 and 21.

If the conversions were equal or greater than the amount of your distribution (reported on J coded 1099R), enter 0 on 25a. There will be no tax or penalty on your distribution. Enter the amount of the distribution ONLY on line 15a of Form 1040. You do not need Form 5329.
Thanks, that's very helpful! Yes, al of my contributions have been via conversions, no regular contributions.

So there's nowhere that I have to indicate that the money was converted over 5 years ago?

kaneohe
Posts: 4773
Joined: Mon Sep 22, 2008 12:38 pm

Re: early withdraw of Roth IRA - Tax form questions

Post by kaneohe » Tue Apr 17, 2018 5:25 pm

emh wrote:
Tue Apr 17, 2018 8:18 am
Alan S. wrote:
Mon Apr 16, 2018 7:58 pm
If your only Roth contribution was the conversion, and you never made a regular Roth contribution, then you have nothing to enter on line 22 of Form 8606. On line 24 enter the total amount you converted to your Roth IRA. Perhaps there was just the one. Of course, you will enter your distribution on line 19 and 21.

If the conversions were equal or greater than the amount of your distribution (reported on J coded 1099R), enter 0 on 25a. There will be no tax or penalty on your distribution. Enter the amount of the distribution ONLY on line 15a of Form 1040. You do not need Form 5329.
Thanks, that's very helpful! Yes, al of my contributions have been via conversions, no regular contributions.

So there's nowhere that I have to indicate that the money was converted over 5 years ago?
apparently not.........since withdrawals from Roth conversions have already been taxed, they are only subject to possible penalties which are covered by another form F5329. From the
instructions for that form. Since your conversions meet the 5 yr rule, you probably don't need
to file here either. Perhaps consider adding a note on F8606 that all conversions were 5 yr
old.

"Recapture amount subject to the
additional tax on early distributions.
If you converted or rolled over an
amount to your Roth IRAs in 2013
through 2017 and you received an early
distribution for 2017, the recapture
amount you must include on line 1 is the
amount, if any, of the early distribution
allocated to the taxable portion of your
2013 through 2017 conversions or
rollovers."

emh
Posts: 13
Joined: Sun Dec 12, 2010 8:01 am

Re: early withdraw of Roth IRA - Tax form questions

Post by emh » Thu Apr 19, 2018 10:52 am

kaneohe wrote:
Tue Apr 17, 2018 5:25 pm
emh wrote:
Tue Apr 17, 2018 8:18 am
Alan S. wrote:
Mon Apr 16, 2018 7:58 pm
If your only Roth contribution was the conversion, and you never made a regular Roth contribution, then you have nothing to enter on line 22 of Form 8606. On line 24 enter the total amount you converted to your Roth IRA. Perhaps there was just the one. Of course, you will enter your distribution on line 19 and 21.

If the conversions were equal or greater than the amount of your distribution (reported on J coded 1099R), enter 0 on 25a. There will be no tax or penalty on your distribution. Enter the amount of the distribution ONLY on line 15a of Form 1040. You do not need Form 5329.
Thanks, that's very helpful! Yes, al of my contributions have been via conversions, no regular contributions.

So there's nowhere that I have to indicate that the money was converted over 5 years ago?
apparently not.........since withdrawals from Roth conversions have already been taxed, they are only subject to possible penalties which are covered by another form F5329. From the
instructions for that form. Since your conversions meet the 5 yr rule, you probably don't need
to file here either. Perhaps consider adding a note on F8606 that all conversions were 5 yr
old.

"Recapture amount subject to the
additional tax on early distributions.
If you converted or rolled over an
amount to your Roth IRAs in 2013
through 2017 and you received an early
distribution for 2017, the recapture
amount you must include on line 1 is the
amount, if any, of the early distribution
allocated to the taxable portion of your
2013 through 2017 conversions or
rollovers."
Thanks! That seems weird to me, but if that's how it is, that's how it is. :happy

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