Tax consequences of liquidating a roth ira local gay datingindiana
The five-year period begins with the first day of the year for which the first contribution was made.
For example, if the first Roth IRA contribution was made for 2017, the five-year period begins Jan 1, 2017.
But, the penalty may still be waived if John meets one of the exceptions, which include the following: Like the first ,000 distributed in the two preceding examples, the first ,000 here is tax- and penalty-free.
Roth conversion amounts are not considered distributed until all contribution amounts have been distributed; earnings are not considered distributed until all contribution – and then all conversion – amounts have been distributed.While these assets are not subjected to income tax, they are subjected to the 10% early-distribution penalty, unless it has been five years since the assets were converted.Unfortunately, it hasn't been five years since John's conversion.And finally, a nonqualified distribution of earnings may be subject to income tax and the early-distribution penalty.The following illustration shows when taxes and the early-distribution penalty apply to nonqualified distributions.