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February 17, 2011

Will distribution from Roth IRA Contribution be taxed?


Will distribution from Roth IRA Contribution be taxed?

I just put $6,000 in a Roth IRA CD as a contribution. These were funds previously taxed. When I withdraw these funds will they be taxed again?


Distributions of amounts contributed to your Roth IRA are always tax-free. The earnings accrued on those amounts are also tax-free if the distributions are < qualified. If the distributions are not qualified, the earnings will be taxable and will be subject to the 10% early distribution penalty, unless an exception applies. Bear in mind that under the ordering rules, contributions are distributed first and earnings are distributed last. As such, if your distributions (over the years) do not exceed your aggregate contributions made over the years, the distribution amount will be tax and penalty free. REMINDER: You can fund a Roth IRA, only if your modified adjusted gross income (MAGI) is below a certain amount. For these MAGI limits, click" here. Answer provided by Appleby Retirement Consulting Inc. Appleby Retirement Consulting Inc provides Consulting, Coaching and Content on IRAs and other retirement plans to Financial, Tax and Legal professionals.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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