Distribution from Roth IRA

[Yardley CPA]

Single filer who is 54 years old and retired under an incentive from his employer. Met age and time worked guidelines. He needed some extra funds and decided to tap his Roth IRA for $10,500. Received 1099R showing the gross distribution as $10,500 and -0- as the Taxable Amount with the Taxable amount not determined box checked. Client indicates this entire distribution consists of his contributions and no growth. He also had surgery during the year and indicates he is "disabled". I know there is Schedule R that we can have completed to verify the disability. I also know that distributions from a Roth may qualify as tax free if the recipient is under 59.5 and disabled.

My question pertains to the Roth Distribution. Given his age, would the entire distribution be considered not taxable (if he were not considered disabled), showing on form 8606 that the basis and the distribution amount are the same? Any thoughts would be appreciated.

Thanks!

[RitaB]

Contributions to ROTH IRA's can be withdrawn at any time, tax free and penalty free, because the tax has already been paid on that money. Yes, I believe you tell IRS that it's a return of contributions in Part IV of Form 8606.

[BulldogTom]

Careful Rita. Your statement is true only if the account has been open for 5 years or more.

Tom

Lodi, CA

[Yardley CPA]

Careful Rita. Your statement is true only if the account has been open for 5 years or more.

Tom

Lodi, CA

Rita is correct BullDog...account has been open for over 10 years. Thanks for chiming in.

[OldJack]

>> open for 5 years or more.<<

The 5 years or more only has to do with penalty on the income earned portion of the distribution. This taxpayer says no income earned on the account so no penalty.