Yardley CPA Posted March 23, 2017 Report Share Posted March 23, 2017 Client received a 1099-R, Code J. I believe this is a fully taxable withdrawal from a Roth and the program recognizes it as such. I did some research and there is an exception if the funds were used for a home purchase. That is not the case in this clients situation. The only thing I'm questioning is the brokerage statement reflects it as a loan? Does that play any part in this or change anything? Quote Link to comment Share on other sites More sharing options...
RitaB Posted March 23, 2017 Report Share Posted March 23, 2017 1 hour ago, Yardley CPA said: The only thing I'm questioning is the brokerage statement reflects it as a loan? Does that play any part in this or change anything? No, it does not. Taxpayer has failed to repay it, so it's a withdrawal. But basis (contributions) in ROTHs are withdrawn first, so that will affect things. 4 Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 24, 2017 Report Share Posted March 24, 2017 I thought you couldn't borrow from an IRA... if you did, that was an illegal transaction and killed the IRA. If it is a Roth IRA, you will have to pay taxes and penalty only on the gains, not the basis as Rita pointed out. 1 Quote Link to comment Share on other sites More sharing options...
RitaB Posted March 24, 2017 Report Share Posted March 24, 2017 I took the original post to mean ROTH 401K. Quote Link to comment Share on other sites More sharing options...
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