Ask the Expert: Does New York State tax Roth IRA withdrawals?


I’ve had a Roth individual retirement account since 2009, and I’m in my 70s. I took a distribution for the complete quantity final month. I know there isn’t any federal tax on the curiosity revenue, however what about New York State taxes on the curiosity?

You won’t owe any federal or state taxes on that distribution.

Right here’s a quick recap of the principles:

You’ll be able to withdraw a Roth IRA contribution anytime with out incurring a tax or a penalty, even the day after making it, as a result of it’s already taxed. However with a number of exceptions, Roth IRA earnings are topic to taxes and a ten % early withdrawal penalty till you’ve got owned the account for 5 years and you’re older than 59½. (The exceptions: You’ll be able to withdraw as much as $10,000 penalty-free to buy your first residence or pay for certified greater schooling expenses, or as a consequence of dying or incapacity.)

The 5-yr calendar starts on Jan. 1 of the yr of your first Roth IRA contribution, and applies to any Roth IRA accounts you open later. For instance, in case you opened your first Roth IRA on March 12, 2009, and also you opened a second Roth IRA in December 2011, the five years would finish for both accounts on Jan. 1, 2014.

However remember that totally different withdrawal rules apply once you convert a standard IRA right into a Roth IRA. You possibly can withdraw the quantity you converted tax-free immediately, since you paid taxes on that money once you did the conversion. But in case you have been younger than 59½ if you did the conversion, the Roth IRA’s earnings are topic to a 10 % early withdrawal penalty in the event that they’re distributed within 5 years of the conversion date.

The underside line

There isn’t any federal or state tax on certified Roth IRA withdrawals.

More info

irs.gov/retirement-plans/roth-iras

irs.gov/publications/p590b



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