[Laura]

If one needs to withdraw contributions at some point from a Roth IRA, but the account has been transferred between numerous companies over the years (as well as rolling over a Roth 403b), how does one “prove” that the withdrawals prior to 59.5 are contributions and not gain?

Are years of tax returns showing the Roth contributions enough?

Thanks!

[Karen]

In the 401(k) space, Roth basis is a data point that transfers when you change to a new provider, for this very reason.

I don’t know if IRA rollovers work the same way, but you could ask your IRA provider what they show for basis on your account, and even how they obtain that info for a rollover-in.

[Doug]

You’re getting good advice, and you might be able to reconstruct your contributions from:

– your original contributions at your original brokerage or mutual fund company (if you happen to have them in paper or online)

– your IRS Forms 5498 sent to you each year in late April or early May (if you keep them),

– your tax software (if it offered to track your Roth IRA contributions like later versions of TurboTax offer), or
– your tax software (IRS Form 8606 in the event that you happened to do a Roth IRA conversion).

The IRS assumes you’re withdrawing contributions from Roth IRAs, and if you do that with a distribution then you’ll affirm it on your income-tax returns.

Audits will not happen unless it’s outrageously large (beyond the maximum contributions you could have made since opening the account) or you make an error on the return with the codes for the 1099-R– and that “audit” is usually an auto-generated query letter unseen by IRS humans asking for more info.

[Jamie]

This information is found on form 5498 which is issued to both you and the IRS annually. These should be kept for this reason.

If you don’t have access to them, I’m not sure.

I keep. a spreadsheet to track my contributions so I know which 5498 I’d need when I withdrawl.

You will only need these records if you are audited though.

[Sandra]

This is why I’m a fan of keeping your own records and not relying on the institutions. A few years ago I decided to ask for record of my initial deposit in a Roth IRA, and was told they keep them only so many years.

Good luck. Self-constructing a reasonable timeline might work if ever questioned by the IRS.

[Rick]

I have a feeling, but never file based on feelings of guy on internet, the irs will ignore most Roth withdrawals like they do hsa withdrawals.

Roth documentation can be complex to incredibly complex over years and decades. And no one really has been told to document the hell out of Roth activities. So, it’s a perfect storm for a mess created unintentionally.

I expect the irs will mostly use a mix of info they have, a basic calc of what they think you are doing, the fact that Roth withdrawal order of operations rules are pretty darn fair and not gotchas, and that most people aren’t trying to pull a fast one on the irs….

all of that will equal an incredibly low enforcement effort and similar level of audit efforts started solely by Roth withdrawals.

[Barbara]

I pulled a small amount from my 7 year old Roth last year, (I don’t have much saved in it) but I’m not 59-1/2 so I’ve got to pay a 10% penalty.

Although I’ve contributed way more than I’ve gained and although I don’t have pay any tax there is still a penalty.

[Author]

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