Here’s a reader question about tracking Roth IRA contributions is previous years (slightly paraphrased for clarity) that I answered to the best of my ability, but perhaps there is a better solution out there.
I am looking to make a withdraw of my Roth IRA contribution that I made
prior to 5 years to avoid taxes and penalties. My question is:How do I find out how much and when I made contributions?
This will tell me how much I can withdraw without taxes or penalties. I am also only age 50. Thank you!
My initial answer was to look at past income tax returns, as that should provide a good record of your Roth IRA contribution history. However, since Roth IRA contributions do not affect your tax liability, they likely aren’t listed directly on the tax return. Going through my own old returns, I found my contributions noted in a supporting document called a Roth IRA Carryover Worksheet. In addition, your IRA broker (trustee) should send an IRS Form 5498 (PDF) showing the amount of your contribution each year. If you’re really lucky, perhaps your broker has records for previous years.
If you don’t have access to old returns or the proper supporting documents, you can ask the IRS for a copy. There are two options:
- Request a tax return transcript. A transcript is not a direct copy of your actual return, but includes most of the line items of a 1040 Form going back up to 10 years. It is free and can be done online, via mail, or over the phone. However, as noted above the return itself may not include Roth IRA contribution information. Update: Form 4506-T does allow you to request Form 5498 transcripts, which should include IRA contribution data.
- Request an exact copy of your tax return and all attachments. This option gives you an exact copy of a previously filed and processed tax return and all attachments. You must complete Form 4506 (PDF) and include a check for $57 for each year requested. Copies are generally available for returns filed in the current and past six years. Would Form 5498 be an included attachment? I’m not sure.
Any better suggestions?
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Guess that it was 5 years ago and call it good?
The advice is sound for how to figure out the size and timing of contributions. I know Vanguard keeps readily-accessible records for contributions made in previous tax years.
If this reader is only withdrawing contributions and not earnings, there is no five year rule to avoid taxes and penalties. Roth IRA contributions can be withdrawn at any time for any reason. If the reader is attempting to take a distribution (withdraw contributions and earnings) and is under 59 1/2, the withdrawal will only be tax and penalty free if:
1. Made to your beneficiary, or to your estate, after you die; OR
2. Made to you after you become disabled within the definition of the IRS code; OR
3. Used to pay for qualified first-time homebuyer expenses.
If the five tax-year period has passed but not the age of 59 1/2, it’s possible to withdraw earnings penalty-free under certain other circumstances, but income tax would still be owed on the earnings. fool.com has a good discussion on this.
Maybe I’m missing something, but I don’t think it matters for her. She should be able to withdraw her contributions tax free, but as she’s only 50 years old, she’ll have to pay taxes and a 10% penalty if she tries to withdraw earnings regardless if it’s been 5 years or not.
To add to Mark’s comment, conversions can be withdrawn tax and penalty free after 5 years (earnings have to wait until 59 1/2 and also 5 years). Direct contributions can be taken out anytime. Btw, withdrawals are first in, first out… meaning contributions are taken first then earnings automatically.
but why not simply log into your account or ask your broker? i use ameritrade for my roth and i can simply go into history and dig out the details. what am i missing here? why so complicated?
It is difficult for me since I have had an IRA since 1994, and a Roth and a conversion done in 2002. Since then I have changed from Putnam, to Janus, to Scottrade, over to Tradeking, and now Fidelity. It goes without saying that I won’t be doing any new transfers soon. This is just too much to keep track of, now that I wish to invest my principle in taxable accounts instead.
Hi Dan,
I am having the same issue. I need my Roth IRA contribution dating 20 years back and I have switched brokerage firms. Can you advise how you got your historic contibutions?
I just wanted to add that this is one reason to keep very good records when it comes to retirement contributions. I agree with some of the other comments that looking back 5 years shouldn’t be that complicated. But, over time, tax laws change, and you may need to look back 30 years to determine taxability of retirement withdrawals, etc. It’s insane, but it is what it is.
I did not get this line of your “IRA broker (trustee) should send an IRS Form 5498 (PDF) showing the amount of your contribution each year”…I have been contributing to Roth IRA with Vanguard since couple of years and they have not send me anything like this….do I have to call Vanguard for this form every year???
Withdrawal of contributions are always tax-free, not need to to mention the 5 years here. Surprised that it wasn’t corrected in the post.
Agreed with Sunil. Whoever has your Roth IRA should provide a way to show your entire contribution history. If not, then find a different place.
Why not look at the Roth account statements? Paper, online, or saved PDFs. Or possibly the online transaction history.
Here’s a good case why you should save all of your bank/investment statements (or at least a year-end summary statement), and not rely on the online X months-worth made available by your financial institutions. It really doesn’t take that long to periodically login and grab those PDFs.
Also, apparently you can request your 5498 series transcript from the IRS..
http://www.irs.gov/newsroom/article/0,,id=148237,00.html
To clarify, this is for Roth IRA contributions (and the subsequent gains) that are *older* than 5 years old. So it could be 6 years old, or 15 years old, or more. Withdrawal of contributions is always tax-free, yes. But the question is how much did you contribute, and how much was gains?
I suppose you could also count the contributions and gains that are 5 years or sooner, and then subtract the difference?
@JR – I get this form every year from Vanguard listing my IRA contributions.
@Jeff – Good catch to see that Form 5498 is included on the transcript request form.
The simplest solution is to leave $25k in the account since that’s the maximum that can be contributed in the last five years?
I thin it would likely be quickest/easiest to go to the broker. My Scottrade account has the IRS 5498 forms online. If you can’t find the forms on the brokers website then you can call them and I assume they can tell you.
This is a good topic. The original post is correct because when you make an early withdrawal, even if it’s tax-free, form 8606 kicks in and one of those lines requires the BASIS of your entire Roth IRA. It’s the sum of all contributions you ever made to it, even if you made a contribution 10 years ago and haven’t touched it since. So to the posters who questioned why you need the records: Yes, you need the records. You can’t NOT fill out the form just because the distribution is tax-free. IRS wants to know the basis of your Roth IRA.
I inherited a ROTH IRA from a friend who passed away last year. How do I find out when she opened the account?