Dividends in Roth
Dividends in Roth
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."
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Silk McCue
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Re: Dividends in Roth
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.
Cheers
Cheers
Re: Dividends in Roth
Thank you.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.
Cheers
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
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Hyperchicken
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Re: Dividends in Roth
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.