Are there any other tax consequences for a Roth withdrawal?
Yes. The following information is intended as a summary for Non-qualified withdrawals. Please consult a trusted tax advisor for more information.
- The portion of a Non-Qualified Roth withdrawal that represents contributions is tax-free, but the portion representing investment earnings is taxable.
- The IRS requires TRS to withhold a minimum of 20% of the taxable portion of any withdrawal that you do not directly roll over to an eligible successor program; you can elect a higher percentage when you file for a withdrawal.
- The taxable portion of any withdrawn funds is taxable upon receipt and will be reported to the IRS in January following the calendar year in which it is distributed. The amount withheld would be forwarded to the IRS and credited toward your taxes for the year of distribution. (Within 60 days of the distribution date, you may roll over any taxable amount you receive or roll over the entire amount of the distribution by replacing the amount withheld by TRS with money from other sources.)
- The IRS may impose a 10% early distribution tax on taxable funds you withdraw before reaching age 59½.