In general, you do not include in your gross income qualified distributions
from your Roth IRA. You may have to include part of other distributions from
Roth IRA(s) in your income.
A qualified distribution is generally, any payment or distribution made
after the 5–taxable–year period beginning with the first year
for which a contribution was made to a Roth IRA set up for you, and that is
made on or after you reach age 59 1/2, made because you are disabled, made
to a beneficiary or to your estate after your death, or that is made to buy,
build, or rebuild a first home.
A distribution used to buy, build or rebuild a first home must be used
to pay qualified costs for the main home of a first time home buyer who is
either yourself, your spouse, or you or your spouse's child, grandchild, parent,
or other ancestor.
Part of any distribution that is not a qualified distribution may be taxable
as ordinary income and subject to the additional 10% tax on early distributions.
Distributions of conversion contributions within a 5–year period following
a conversion may be subject to the 10% early distribution tax, even if the
contributions have been included as income in an earlier year. Refer to Topic 558 , Early Distributions from IRA's, for more information.
If you converted your traditional IRA to a Roth IRA, but were not eligible
to do so, your conversion will be treated as a taxable distribution from your
traditional IRA and a regular contribution to your Roth IRA, and may be subject
to additional tax on early withdrawals and an excise tax on excess contributions,
unless the converted amount is recharacterized.
You may recharacterize your Roth IRA conversion by directly transferring
the amount converted (including all net earnings from the date of conversion)
back to a traditional IRA. You may do this prior to the due date, including
extensions, for filing your tax return. Show the conversion on Form 8606 (PDF). Refer to the Form 8606 Instructions for
information on reporting recharacterizations.
Refer to Topic 309 for information about Roth IRA contributions.
For more information about all types of IRAs, refer to Publication 590, Individual
Retirement Arrangements.
