What Is the Roth IRA Required Withdrawal?
A Roth IRA is a type of individual retirement account. It differs from a traditional IRA in that you cannot deduct the contributions from your income taxes, and you can contribute to the Roth IRA for life. With a Roth IRA, unlike a traditional IRA, qualified contributions can be withdrawn tax free and, under specific conditions, you are not penalized for withdrawals prior to retirement age. Only certain circumstances require withdrawals from Roth IRAs.
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Roth Contribution Rules
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When you open up an IRA, you must designate it as a Roth at that time. You can contribute to the Roth if you have taxable compensation and your income does not exceed $177,000, and you are married filing jointly or a qualified widower; $120,000 if you are single, head of household or married filing separately and you didn't live with your spouse; or $10,000 if you lived with your spouse and filed separately. You may qualify for a tax credit on your contributions if your adjusted gross income is under $55,000 if married filing jointly; $41,625 if filing as head of household; or $27,750 if you are single, married filing singly or a qualified widower. Note, these income limits are for 2011 and the IRS changes these limits annually.
Spouse Beneficiary -- Required Withdrawals
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If you, as the beneficiary of an estate, receive a Roth IRA, the distribution rules are the same as those for traditional IRAs. If you are the surviving spouse, you can elect to take ownership of the IRA and determine what the required distribution amount should be as of the year your spouse died. If the owner died before age 70 1/2, and you are the spouse, you do not have to take distribution until your spouse would have reached age 70 1/2.
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Individual Beneficiary -- Required Withdrawals
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If you are an individual, you may be required to take the entire distribution within five years of the death of the decedent. In this case, no distributions are required prior to the fifth year. You can also elect to take the withdrawals as an annuity, in which case you must calculate your life expectancy to determine the annual amount that must be distributed over your lifetime.
Other Withdrawals
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Roth IRAs are unique in that post-tax dollars are contributed making those contributions non-taxable at the time of distribution. You can also withdraw from a Roth, penalty-free, under certain conditions and for certain reasons. If you have held the Roth IRA for five years, you can withdraw funds without penalty if you are 59 1/2, have a disability, purchased a home, or it's made to your estate's beneficiary. Withdrawals for which taxes have already been paid are non-taxable under any circumstances.
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