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Ask the Expert: How to report a Roth IRA withdrawal

I'm 66 and still working full time. About 20 years ago, I converted a traditional IRA into a Roth IRA at Fidelity, paying taxes on the amount I converted. Last year I withdrew money for the first time — $5,000. When I received the 1099R, it showed a $5,000 gross distribution, but Box 2(a) of the form ("Taxable Amount") is blank, and Box 2B ("Taxable Amount not determined") is checked. I assumed there was an error because Box 2(a) didn't say $0 tax is due. But Fidelity said it's not their responsibility to determine how much tax I owe.

How do I prove that I don't owe any taxes on that withdrawal? I assumed I wouldn't even have to report it since I met all the criteria for a tax-free withdrawal. I'm also concerned because before I got the 1099R, I made another $5,000 withdrawal for this year.

You're right that these Roth IRA withdrawals are tax-free — "qualified" in tax jargon — because you're over 59½ and you've owned the Roth IRA for at least five years.

But you still must report them to the IRS, says Alan E. Weiner, a Plainview tax accountant.

Report your 2019 $5,000 gross distribution on line 4(a) of Form 1040. On line 4(b), the form asks you the taxable amount of the distribution. Write "$0."

You must also report the distribution on Form 8606, which you should include with your tax return. Complete Part III of that form ("Distributions from Roth IRAs"). Based on your email, on lines 19, 20, and 21, you should enter "0." On line 22 ("Your basis in Roth IRA contributions") enter your total contributions since 1998. Sign and date the form.

The bottom line

You must report Roth IRA distributions to the IRS even when they're not taxable.

More information

irs.gov/retirement-plans/roth-iras

irs.gov/forms-pubs/about-form-8606

TO ASK THE EXPERT Send questions to Ask the Expert/Act 2, Newsday, 6 Corporate Center Dr., Melville, NY 11747, or email act2@newsday.com. Include your name, address and phone numbers. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own consultants for your specific needs.

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