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Retirement / Decumulation, Tax Planning, Assets and Investment Planning

Will A Distribution From My Roth IRA Be Tax & Penalty-Free?

Some clients may have unique circumstances that could result in a distribution from a Roth IRA being taxed or penalized. Many of these situations rarely come up, which makes it hard to remember the usual distribution rules from a Roth IRA.

To help make this easier, we have created the “Will A Distribution From My Roth IRA Be Tax & Penalty-Free?” flowchart. This flowchart helps to quickly identify circumstances that could have an impact on how a distribution is taxed (and penalized). It considers the following:

  • The 5-Year Rule
  • Impact of Roth conversions
  • Distribution ordering rules
  • Conditions that trigger the 10% early distribution penalty
  • Exceptions to the 10% early distribution penalty

 

Updated for 10/25/2021

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