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10% tax on early distributions from a Roth

Pages 31-32 of Pub 590-B say that there's a separate 5-year period for each conversion from traditional to Roth IRA, and early distributions "may" have to pay a 10% additional tax. Page 32 says "you may not have to pay the 10% additional tax in the following situations," and the first one listed is "You have reached age 50½." Those "may"s make me nervous.

I'm over 72, and I established my Roth in the 2015 tax year. On the flowchart on page 34, I can answer Yes to the first two boxes "Has it been at least 5 years from the beginning of the year for which you first set up and contributed to a Roth IRA?" and "Were you at least

59½ years old at the time of the distribution?". Therefore, according to the flowchart, _every_ distribution from my Roth will be a qualified distribution.

If I do a Roth conversion but then need the money only a couple of years later, can I rely on the flowchart, with no need to worry about the "may"s on pages 31-32?

Reply to
Stan Brown
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I am looking at the online HTML version of Pub 590-b at

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At the latter site, look at the part that, like pages 31-21, starts with:

"Exceptions. You may not have to pay the 10% additional tax in the following situations."

The latter is a //sub-section// of the part titled "Additional Tax on Early Distributions." Now look at the first paragraph below the "Additional Tax on Early Distributions" section. This paragraph states:

"If you receive a distribution that isn't a qualified distribution, you may have to pay the 10% additional tax on early distributions as explained in the following paragraphs."

Focus on the phrase "qualified distribution." For the definition of qualified distribution, scroll down to the section titled, "What Are Qualified Distributions?" This section explains that your distributions are "qualified distributions." This means that what you quoted from pages 31-32 does not apply to your distributions.

The reasoning behind your not having to pay the aforementioned 10% penalty is that, if you had never done the conversion from your traditional to the Roth IRA, but instead took a distribution from the traditional IRA after reaching age 59.5, you would face no penalty (all other things equal). The distribution from the traditional IRA would simply be taxable as income for the year you took the distribution, without any penalty.

Reply to
honda....

On Wed, 9 Nov 2022 14:54:36 EST, Stan Brown wrote: (regarding the online Pub 590-B)

Thanks very much. This is what I missed in the logic: if it's a qualified distribution, then it's always tax free and no other conditions must be met.

Because I didn't read that crucial sentence correctly, I thought to be tax free, it must be a qualified distribution _and_ meet additional tests. Now I understand: The other conditions may exempt all or part of a NON-qualified distribution, but if the distribution is qualified then the other conditions are irrelevant.

Reply to
Stan Brown

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