I'd like to withdraw from my Roth IRA without hitting the penalties. I know I can do so by withdrawing just my contributions, but this account includes normal contributions (plus gains/losses) and also a recently rolled over Roth 401k.

So given the hypothetical below, how much can I withdraw? Is it the sum of pre-rollover contributions ($150) to the r401k PLUS normal contributions to the rIRA ($175)? That'd be a theoretical $325, but since the current balance is $300, does that make the final answer $300?

$ 150... Contributions to rIRA before adding r401k rollover
$ -50... Gains/Losses/Commissions
-----------------------------
$ 100... rIRA balance before adding r401k rollover

$ 175... Contributions to r401k before being rolled over
$ +25... Gain/Loss
-----------------------------
$ 200... r401k balance before before being rolled over

$ 325... Combined contributions
$ -25... Combined gain/Loss
-----------------------------
$ 300... rIRA current balance after adding r401k rollover

tia

This post was edited on 12/3/13 at 6:23 pm

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Posted by tirebiter

7K R&G chile land aka SF

Member since Oct 2006

10708 posts

Posted on 12/3/13 at 5:38 pm to macrometer

Well, this is yet another reason I don't subscribe to the theory of using a Roth as a savings account.

If you have the intention of doing so I would not combine a contributory Roth IRA with a rollover [ETA: Roth] 401k, instead open separate accounts. Then you could use the magic form known as a 5498 to accurately document your contributions in case the IRS would like to "consult" with you regarding any withdrawals. I keep these forms religiously in case of ever having to provide backup in case of questions or an audit as it indicates annual contributions in black and white, no questions asked. Those losses are another reason I am not a big fan of the Roth as savings, what if you contributed $5k and that year the market declined 35% and you need the entire $5k?

This post was edited on 12/3/13 at 7:01 pm

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Posted by macrometer

Member since Aug 2013

35 posts

Posted on 12/3/13 at 6:19 pm to tirebiter

quote:
Well, this is yet another reason I don't subscribe to the theory of using a Roth as a savings account.

Yeah, a very large, unexpected, and urgent expense came up recently in my extended family. It needs to get out ASAP, and I'll worry about the tax headache later.

So is $300 the answer here? Or is the accounting more complicated than I'm making it out to be?

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Posted by tirebiter

7K R&G chile land aka SF

Member since Oct 2006

10708 posts

Posted on 12/3/13 at 6:59 pm to macrometer

From IRS pub 590, but you already know this:

Are Distributions Taxable?

You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. You may have to include part of other distributions in your income. See Ordering Rules for Distributions , later.

LINK

I would believe that as long as the distribution taken is less than what you have contributed you would be OK, but definitely keep the documentation of all contributions/withdrawals. Page Poodlebrain, he is the tax expert. I have never withdrawn $ from a retirement account so don't have first hand experience.

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Posted by macrometer

Member since Aug 2013

35 posts

Posted on 12/3/13 at 7:14 pm to tirebiter

Thanks. I'll read through it. I keep all records of everything, so the tax stuff will just be a matter of putting in the work.

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