1099R And Roth Distributions

One of the advantages of a Roth IRA is that you can take your contributions back without owing taxes.

In other words, if you put $2000 into a Roth IRA and it grows to $3000 in value, you can generally take $2000 back out of the account without tax consequences.

Roth 1099R – Only Taking Back Contributions

People are often surprised when they received a 1099R for a Roth distribution when they’ve taken out less than they’ve contributed. In their mind, the distribution is not taxable, so there’s no reason for a 1099R form.

This is similar to the anxiety people feel when they get a 1099R after doing a 401(k) rollover.

Unfortunately, you’ll still get a 1099R when you take less out of your Roth than you’ve contributed. The institution that holds your account leaves it up to you to determine whether or not the distribution is taxable. In other words, it’s between you and the IRS.

Reporting Roth Distributions

To make sure that you do not have to pay taxes, you have to properly report everything to the IRS.

When you take your contributions back out from a Roth IRA, use form 8606. The form will ask what your “basis” in the account is. There, you’ll report your contributions, and you can compare those contributions against the amount you took out. This helps you show the IRS that you’re just taking your own money back.