Christian Posted March 4, 2013 Report Share Posted March 4, 2013 A grandmother contributed $3000 to a Roth IRA account for her grandson some three years ago.In 2012 grandson withdrew some $1000 of the account. The 1099-R indicates no taxable amount with the distribution coded as J which means he owes the 10% penalty being under 591/2 years of age. My question is is the $1000 fully taxable as well. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 5, 2013 Report Share Posted March 5, 2013 No. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted March 5, 2013 Report Share Posted March 5, 2013 No, the principle is not taxed because they got no deduction for the contribution in the first place. It's just like you taking money out of your savings account. It's not income, just moving your own money from one place to another. It's only the earnings that are tax-sheltered, not the contributions. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted March 5, 2013 Report Share Posted March 5, 2013 You have to fill out page two of form 8606 and report the basis. Then it comes up non taxable. Quote Link to comment Share on other sites More sharing options...
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