Author Topic: Roth IRA Contributions/Withdrawal Advice  (Read 531 times)

CestMoi

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Roth IRA Contributions/Withdrawal Advice
« on: December 16, 2019, 02:58:03 PM »
I have a question for those who are Roth IRA savvy. For hardship reasons, I may need to withdraw some of my Roth IRA contributions. My Roth IRA was converted in 1998 from my existing Traditional IRA into a Roth IRA, and I paid the taxes for this conversion off over the following three years. Unfortunately, my tax returns from the years 1998, 1999, and 2000 were lost in a move, so I don’t have the original paperwork or amount I converted to a Roth IRA as “proof” for the IRS.

My questions: How can I find the amount I originally converted to a Roth, and is that amount OK for me to withdraw penalty free? How will the IRS know the amount I withdraw represents my 1998 contribution? The IRS only retrieves tax returns up to a few years prior, so I can’t go to them to get the 1998 amount I converted. Fidelity only retrieves financial records from 10 years back, so that doesn't help me, either. Will the IRS have a record of the original 1998 converted amount? I remember how much it was generally, but I don’t have the specific amount. The *current* value of my Roth IRA is $409,000.

Finally, if I withdraw the 1998 contribution amount, do I then have to pay current taxes on that amount? Thanks so much in advance.


terran

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Re: Roth IRA Contributions/Withdrawal Advice
« Reply #1 on: December 16, 2019, 03:51:00 PM »
You could request your tax returns from those years, which should show how much you converted. I don't know what that process is like. You might be able to get the records from your IRA custodian at the time, but probably only if the IRA is still with that same custodian.

Since it's been over 5 years since the conversion you can withdraw the amount converted tax and penalty free, but not growth on that money in the Roth IRA since then. As long as the total amount withdrawn as of any given date is not more than the amount eligible for withdrawal on that date you'll be fine. That amount won't be eligible for withdrawal in the future though. If you feel very confident that you can withdraw an amount less that the total amount converted based on your memory I would feel comfortable doing that even though you don't have the records as you always request the tax returns if you get audited.

You can also always withdraw any direct Roth IRA contributions you've made over the years.

No you won't pay tax or penalty on any direct contributions or non taxable conversions made at any time or taxable conversions made at least 5 years ago.

There are also some exceptions to the early withdrawal penalty depending on the source of your hardship such as education, medical, first time home purchase, and disability. See more at https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions

CestMoi

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Re: Roth IRA Contributions/Withdrawal Advice
« Reply #2 on: January 02, 2020, 06:35:37 PM »
terran, thanks so much for being the only responder to my question!

I can't request the tax returns from those years, since the IRS doesn't offer copies of returns that are that old, and the tax returns I would need would be from 1998. My Roth IRA is in Fidelity, and they also can't help me, as they only keep records for 7 years. The Roth IRA account has changed account numbers a few times since then (not sure why Fidelity does this), and they can't pull up any records from 1998.

My next step is to try to go directly to the IRS, but I was on hold with them for two hours tonight with no luck.