As an important retirement plan, Roth IRA distributions prior to retirement are seldom a good idea. Still, understanding the rules governing how they are taxed are critical to minimize the impact.
During retirement, Roth IRA distributions are to be expected. Yet even then, due to their favorable tax treatment, they are often best delayed until other funds, such as those held in a 401(k) or traditional IRA, have been exhausted.
No matter your age, work status, or Roth IRA retirement plan balance, important considerations about Roth IRA distributions include:
- Qualified vs. non-qualified withdrawals
- The five year rule
- Ordering rules
- Penalty tax
All of these topics - and some examples - are covered in Roth IRA Distributions.
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