income tax for 2016 and roth ira distribution

If neither of these applies, your Roth IRA withdrawal is generally considered to be a nonqualified withdrawal, and any investment gains are taxable (but not your original contributions). Any withdrawal from your account after you turn 59 1/2 years old and your account has been opened for five years or more.A withdrawal of your original contributions at any time, for any reason.A 'qualified' Roth withdrawal includes the following: Withdrawals from a Roth IRA Since Roth IRA contributions are made on an after-tax basis, qualified withdrawals are completely tax-free. If you decide to withdraw $10,000, multiplying by 0.85 gives a taxable IRA withdrawal amount of $8,500. Subtracting this from 1 gives 0.85 for the taxable portion of the account. This is the taxable amount of your withdrawal.įor example, if you have a $100,000 traditional IRA and have made $15,000 in nondeductible contributions over the years, the nondeductible portion is 0.15. Next, subtract this amount from the number 1 to arrive at the taxable portion of your traditional IRA.įinally, multiply this number by the amount you withdrew from your traditional IRA. Take the total amount of nondeductible contributions and divide by the current value of your traditional IRA account - this is the nondeductible (non-taxable) portion of your account. If you had any nondeductible contributions (not common), the calculation gets a little more complicated.įirst, you'll need to figure out how much of your account is made up of nondeductible contributions.

Withdrawals from a traditional IRA If all of your contributions to your traditional IRA were tax-deductible, the calculation is simple - all of your IRA withdrawal will be counted as taxable income. Here's what you need to know to calculate the taxable amount of any withdrawal from a traditional or Roth IRA. Depending on the type of IRA account you own, when you made your withdrawal, and whether your contributions were deductible, the taxable amount of an IRA withdrawal can vary significantly.

Income tax for 2016 and roth ira distribution