Timothy Sumer

Are Roth IRA Distributions Taxed? How To Avoid Penalties and Taxes on Roth IRA Distributions Can your Roth IRA become taxable? Are distributions from your Roth IRA taxed? If you don't follow two very specific rules, you could incur taxes and penalties on your Roth IRA distribution. That is what we are going to discuss in this weeks, Your Financial EKG™ blog. Roth IRA's are supposed to be completely tax free. "SUPPOSED TO BE" is the key statement in that sentence. Roth IRA's can become taxable and penalized if you don't follow two specific rules. Those rules are the "5 Year Rule" and the "Under 59.5" Rule. Let's dive into both: Roth IRA 5 Year Rule: The 5 Year rule says that you must wait 5 years before taking earnings out of your Roth IRA after your first contribution or conversion. You must also be over the age 59.5 to avoid penalties. SO, in plain english: to take investment earnings out of your Roth IRA without owing t...