Will A Distribution From My Roth IRA Be Tax and 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 and 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 11/15/2020