Roth IRA distribution

[B. Jani]

My client, husband 62, wife 60 both permanent disable withdraw the money from ROTH ira about 10k. 1099R shows code T (Roth withdrawal-exception applies). I use ATX MAX and it carries the whole amount of taxable on 1040 line 15B as income. The last 5498 they recieved for both in the year 2006 which according to them was that after 2005 they never contributed anything to the account. So it should be tax free withdrawal.

How do I remove the withdrawal from 1040 as it shold be tax free withdrawal? Am I missing anything on 8606 or 1040 to remove from becoming taxable? It is 10k and make a big difference due to health and income.

TIA.

[Kea]

There is a line on the 8606 where you can input their basis in the Roth. I think it's about 1/2 down the 2nd page, but not sure. They'll have to figure out how much they have contributed over the years.

Good luck.

[kcjenkins]

Kea, no part of the ROTH IRA should be taxable, as long as the five year rule is met. From the instructions to the preparer of the 1099-R:

Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but:

• The participant has reached age 59½,

• The participant died, or

• The participant is disabled.

So my guess is that you need to check some box for 'has the 5 yr rule been met'. That will fix the problem.

[Kea]

OK, I missed a sentence. My bad.

[B. Jani]

Thanks for the reply. I came out with the same option.

What happens that due to 1099R, ATX MAX creates 8606, so i deleted the 8606 and put the total amount to 15A for matching purpose. That took care of it.