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Author: mawhinney Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121172  
Subject: ROTH Mistake Date: 3/4/2014 11:37 AM
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Help! Befuddled! Did I make a major mistake? Attempting to streamline & simplify my portfolio, I closed out a Roth MM held less than 5 years as it held only $39.72. When I started on my 2013 taxes, I realized that I may be penalized for closing the account as I've held it less than 5yrs. Not wanting to continue investing in more shares of the mutual fund, I must have opened a Roth MM to receive any payouts.

I know there is a big fine for taking Roth funds before the 5 years. I think it is 50%. Will the penalty be levied on just the $39.72 or on my entire Roth account?
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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 120344 of 121172
Subject: Re: ROTH Mistake Date: 3/4/2014 11:46 AM
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Contributions can be withdrawn at any time without penalty or taxes.

If there are no ROTH contributions and all are conversion, at worst the penalties would be assess on the $39.72 and not on your entire ROTH account.

Have contributed (not conversions) more than $40 to your ROTHs?
Have you taken any previous distributions?

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 120345 of 121172
Subject: Re: ROTH Mistake Date: 3/4/2014 11:52 AM
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Help!

Gladly

Befuddled!

Indeed

Did I make a major mistake? Attempting to streamline & simplify my portfolio, I closed out a Roth MM held less than 5 years as it held only $39.72.

I don't know where your wires got crossed, but it's likely that this will not affect your tax bottom line at all. Start by reviewing the ordering rules for Roth distributions in Chapter 2 of Pub 590. Then Check out Part III of Form 8606, where you report this distribution.

Phil
Rule Your Retirement Home Fool

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