cashing out Roth IRA

tsanaha · Post by **tsanaha** » Fri Jul 08, 2011 9:49 am

for years, i have put all together 20K in my roth IRA. it is now 25K. i need money badly, can i cash out 20K (the after tax money that i put in) right now without any tax and penalty ?

if so, what should i report to IRS ?

nelsona · Post by **nelsona** » Fri Jul 08, 2011 10:07 am

You will report the distribution on Forms 8606 and 5329. If you withdraw no more than you contributed, no tax or penalty will be incurred.

If you take more than you contibuted, only the excess may be taxable and penalized, unless you have some qualifying situation that would exempt you from penalty.

See IRS Pub 590 and forms above.

tsanaha · Post by **tsanaha** » Fri Jul 08, 2011 10:23 am

Thanks...

For years, I have never reported my contribution to Roth IRA.. I just wonder how IRA would know my total contribution ? I called up my bank and they did have a record of my total contriubtion and would send me form 5498..

I have been stupid in filing forms -- just want to make sure if i should tell IRS myself each contribution to IRS that I have made.

nelsona · Post by **nelsona** » Fri Jul 08, 2011 10:42 am

Your Roth admin is required to send statement to IRS (and you) every year on your IRA and Roth contributions, etc.
You should have been getting this form all along, even if it is not submitted with your return.

tsanaha · Post by **tsanaha** » Fri Jul 08, 2011 10:48 am

nelsona,

thanks! you have been very helpful not only to the taxpayers but also to IRS --- i wish they could make our tax system easier to understand..