Things You'll Need:
- Roth IRA account
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Step 1
There are no mandatory distributions for those with Roth IRA accounts, as long as the owner is alive. Compare this to a traditional IRA, where you must start taking mandatory distributions no later than April 1st of the year following the year the IRA owner reaches age 70.5.
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Step 2
If you die, there are minimum distribution rules that take effect. The rules that take effect are the ones for traditional IRA's, and this is treated as if the Roth IRA owner died before the beginning date of the Roth IRA taking effect.
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Step 3
As for beneficiaries of the Roth IRA, in general the interest in the account must be distributed by the end of the fifth calendar year after the owner's death, unless payable over the life of the beneficiary. If paid as an annuity like this, the whole interest must be payable over the life expectancy of the beneficiary and distributions must start before the end of the calendar year following the decedent's death.
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Step 4
There is an exception to the rule for minimum distributions if the owner dies if the beneficiary is the spouse. If the sole beneficiary of the Roth IRA is a spouse, the spouse can delay taking any distributions until the decedent would have reached aged 70.5. Or, the spouse can treat the Roth IRA as her or his own, meaning there are no distributions required.
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Step 5
Once you reach age 59.5, any distributions from your Roth IRA are not subject to any penalties or taxes. This includes the earnings on the account! The only stipulation is that you have to have held the account for at least five years. Otherwise, you'll be subject to a 10% penalty tax on the earnings that you withdrew, as well as be responsible for the regular taxes on the earnings.
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Step 6
If you have held the Roth IRA for five years but you have not reached age 59.5, there are still some qualified distributions you can take that are not subject to taxes or penalties. These are distributions taken because you are disabled, those to purchase a first home up to $10,000, and those paid to your beneficiary in the event of your death.
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Step 7
If you take a distribution after five years but before you reach age 59.5, some of these distributions might be considered penalty exceptions. Penalty exceptions include certain qualified educational expenses like tuition and fees, unreimbursed medical expenses, substantially equal periodic payments, and health insurance premiums if you lose your job. These distributions are not subject to the 10% penalty, but you will have to pay taxes on the earnings portion of the distribution from your Roth IRA.
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Step 8
If you take a nonqualified distribution, it is subject to the 10% penalty and taxes, but only to the extent of earnings and not contributions made to the Roth IRA account
