Time to enjoy retirement – Remember…first in, first out
When taking a distribution from a Roth IRA, the money comes out on a “first in, first out” basis.
Here is the order in which Roth IRA money is distributed:
- Annual contributions
- Conversions and retirement plan rollovers (by year)
The rhyme & reason of correct distribution practices
So why is this important? Because your annual contributions have already been taxed, so since they come out first, you may be able to take them out early, tax and penalty free.
If you have any questions, please be sure to speak with a CPA or tax professional.