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Roth IRA Distribution Ordering Rules - Keep It Simple Thumbnail

Roth IRA Distribution Ordering Rules - Keep It Simple

Within the 400-page Ed Slott advisor training manual, we include a basic chart that outlines the Roth IRA distribution ordering rules and the availability of those specific dollars. When presenting the material to a live audience, I always say it is my favorite page. Those in the crowd usually joke and ask incredulously, “You have a favorite page in this book?”

The Roth IRA distribution ordering rules are threefold: (1) Contribution, (2) Conversions, and (3) Earnings. Reading this article will help you to understand the details of each section.

Yes. For such a simple graph, I think it will get a person through 95% of all Roth IRA distribution questions (and that percentage might be low). In fact, I keep the chart on my computer desktop and have shared it with so many people I lost count. The Slott Report format precludes me from sharing the actual chart, but I can share the words on it. Some key items I always mention during our training programs before discussing the chart:

  • Remember - the IRS views ALL of a person’s Roth IRAs as one big bucket of money. It does not matter how many Roth IRAs you maintain.
  • This is only applicable to Roth IRAs. These ordering rules do not consider any Roth dollars a person may have in a 401(k) nor does it factor in any inherited Roth IRAs.
  • Pay particular attention to the “OR” and “AND” words. These little words make a big difference as to availability of the Roth IRA funds.
  • When taking a distribution from a Roth IRA, this is the order in which the dollars come out, 1 through 3. You cannot access your converted dollars until the contributions have been depleted, and you cannot access any earnings until both the contributions and conversions are gone.

Keep it simple.


And now, the words on my favorite chart…

Roth IRA Distribution Ordering Rules

1. Contributions. No tax. No penalty.

2. Conversions. No tax. No penalty if distributed after 5 years OR distributed after age 59 ½.

3. Earnings. No tax or penalty if distributed after 5 years AND 59 ½.

By Andy Ives, CFP®, AIF®
IRA Analyst
Ed Slott and Company, LLC

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Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.

Copyright © 2023, Ed Slott and Company, LLC Reprinted from The Slott Report, 10/30/23, with permission. https://www.irahelp.com/slottreport/roth-ira-distribution-ordering-rules-%E2%80%93-keep-it-simple, Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article. 
Investment advisory services offered through Mutual Advisors, LLC DBA California Retirement Advisors, a SEC registered investment advisor. Securities offered through Mutual Securities, Inc., member FINRA/SIPC. Mutual Securities, Inc. and Mutual Advisors, LLC are affiliated companies. CA Insurance license #0B09076. This content is developed from sources believed to be providing accurate information and provided by California Retirement Advisors. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. California Retirement Advisors, nor any of its members, are tax accountants or legal attorneys and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional.