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Tax Treatment
•Ordinary income taxes are due on the taxable portion for the year of distribution
Penalties
• 10% penalty on most withdrawals made before age 59½
Exceptions (Penalty Waived)
• Death
• Disability
• Substantially equal periodic payments
• Medical expenses above 7.5% of AGI
• First-time home purchase (up to $10,000)
• Post-secondary education expenses
• Payment of health insurance premiums by an individual receiving
unemployment compensation for at least 12 consecutive weeks
• IRS levies
• Qualified reservist distribution as provided by the Pension Protection Act of 2006
Required Minimum Distributions
• Must begin withdrawals by age 70½
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Tax Treatment
• Contributions are always available for tax-free withdrawals
• No taxes due on earnings if account has been established for 5 years
and owner has reached age 59½
• No taxes on earnings - regardless of age - if account is at least
5-years old and is due to death, disability, or first-time home purchase
(up to $10,000)
• Ordinary income taxes are due on earnings withdrawn after age 59½
if account is less than 5 years old
• Clock for 5-year holding period starts in the year you make first
Roth contribution or conversion
Penalties
• Nonqualified distribution of earnings subject to 10% penalty
• Taxable conversion assets distributed within 5 years of the conversion
subject to penalty
• Separate 5-year clock for each conversion account for the purpose
of the 10% early withdrawal penalty
Exceptions (Penalty Waived)
• Same as Traditional IRAs (see left)
Required Minimum Distributions
• None during lifetime
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