1 For a distribution from a Roth IRA to be federal (and possibly state) income tax-free, it must be qualified.
A qualified distribution from your Roth IRA may be made after a five-year waiting period has been satisfied (this period begins January 1 of the tax year of your first Roth IRA contribution or Roth IRA conversion, if earlier) and you (i) are age 59½ or older, (ii) are disabled, (iii) qualify for a special purpose distribution such as the purchase of a first home (lifetime limit of $10,000), or (iv) are deceased. If you receive a nonqualified distribution from your Roth IRA, any earnings distributed generally will be subject to ordinary income tax, plus a 10% additional federal tax if received before age 59½ unless an exception applies.
2 The required beginning date for RMDs is age 72. You may defer your first RMD until April 1 in the year after you turn age 72, but then you’d be required to take two distributions in that year. Failure to take all or part of an RMD results in a 50% additional tax applicable to the amount of the RMD not withdrawn. Consult your tax advisor for more information on your personal circumstances.
3 An eligible designated beneficiary (EDB) is a surviving spouse, disabled or chronically ill individual, an individual who is not more than 10 years younger than the decedent, or a child of the account owner who has not reached age 21. Distribution rules differ based on the date of death, whether or not the beneficiary is an EDB, and whether or not the original account owner died before or after their required beginning date for Required Minimum Distributions. The rules are complex and distributions have taxable implications. You should consult your personal tax advisor regarding your specific situation.
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
