Lisa, age 47, needed some cash so she withdrew $51,000 from her Roth IRA. At the time of the distribution, the balance in the Roth IRA was $200,000. Lisa established the Roth IRA 10 years ago. Over the years, she has contributed $20,200 to her account. What amount of the distribution is taxable and subject to early distribution penalty?
A)$0.
B)$5,100.
C)$30,800.
D)$51,000.

Question

Quizplus · Accepted Answer

Since Lisa established her Roth IRA 10 years ago and is over 59.5 years old, she meets both the 5-year rule and the age requirement for qualified distributions. Therefore, the entire $51,000 distribution is tax-free and not subject to the early distribution penalty. The fact that Lisa withdrew more than the amount she contributed does not matter in this case.

Lisa, Age 47, Needed Some Cash So She Withdrew $51,000