Skip to support content
(855) 698-0691 info@lc.taxprocessorsplus.comEmail us

Form 8606 - Roth IRA Distributions

Online · Written guide Content date 2 min read

Form 8606 is used to report the following transactions related to an IRA:

  • Nondeductible contributions made to a traditional IRA;
  • Distributions from a traditional, SEP, or SIMPLE IRA, if the taxpayer has basis in these IRAs;
  • Conversions from a traditional, SEP, or SIMPLE IRA to a Roth IRA;
  • Distributions from a Roth IRA.

When is a Roth IRA Distribution taxable?

A Roth IRA must be in place for a full 5 years prior to any withdrawal. Distributions from a Roth IRA that include earnings may be taxable if the taxpayer is under the age of 59-1/2 or has not met the 5-year rule.

If either the age or 5-year rule is not met, earnings withdrawn will be included in income and taxed. Taxpayers under the age of 59-1/2 will also be subject to a 10% penalty on earnings withdrawn unless they meet qualified exceptions.

Taxpayers who have met the age 59-1/2 requirement will be subject to income tax on earnings of early withdrawals (due to not meeting the 5-year rule), but will not be subject to the 10% early withdrawal penalty.

Form 8606 is used to determine the amount of the taxable distributions, however these kinds of distributions are excluded:

  • a rollover (other than a repayment of a qualified disaster distribution on Form 8915-F;
  • a qualified charitable distribution;
  • a one-time distribution to fund an HSA;
  • a recharacterization;
  • a return of certain contributions (see the form instructions for more info);

To enter information about Roth IRA distributions in Tax Processors Plus Online, from the Federal Section of the tax return (Form 1040) select:

  • Deductions
  • Adjustments
  • Nondeductible IRAs - For a MFJ return, select who the form is for, either Taxpayer or Spouse.
  • Distributions from Roth IRAs - See the Form 8606 instructions for each of these menu lines to determine what to enter and what to exclude.
    • Total Roth IRA distributions in 20xx (form line 19)
    • Qualified First-Time Homebuyer Distribution (form line 20)
    • Basis in Roth IRA Contributions (form line 22)
    • Basis in Roth Conversions (form line 24)

Note: This is a brief guide on entering Roth distributions in Form 8606 in Tax Processors Plus Online. This is not intended as tax advice.

Additional Information:

IRS: Form 8606 Instructions

IRS: Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)