ROTH IRA'S

[joselopez395]

Distribution from ROTH IRA, under 59 1/2 y/o. From 2021 taxable conversion. Code J, no entry box 2, taxable amount not determined checked. Distribution from contribution (conversion), not from earnings. Is this distribution taxable? Taxes were paid at conversion from a traditional IRA.

[taxiowa · Accepted solution]

Enter your Roth cost basis on IRA info worksheet part II.  This would be the amount taxed on earlier rollover to Roth.  That portion will come out tax free as you withdraw form Roth.  But why did the idiot convert the IRA to a Roth in the first place.  Did they think they were going to be paying at a higher rate when they retire?

[qbteachmt]

"From 2021 taxable conversion."

No; it's from the Account and you didn't give us enough info to know if it is "from" that conversion. There are ordering rules for Roth withdrawals, and it will matter if there are other Roth funds, other Roth accounts, if there were any contributions, and you want to read up on the three 5-year rules. The scenario of taking converted funds here means at least one of the 5-year rules is not meant. There is a difference between Taxable and Subject to penalty.

"Code J, no entry box 2, taxable amount not determined checked."

The issuer of the funds doesn't usually know all that applies to your taxpayer for the distribution. That's the due diligence you will be doing now. J = early, which we know by the age of the taxpayer. The ordering rules and the 5-year rules will further determine the rest.