Tax on Roth IRA contributions - automatic or taxed as income at the end of the year?

Forum|Forum|1 year ago
January 30, 2025
1 reply
0 views

Just trying to clarify. Does a brokerage withhold taxes for Rot contributions automatically, or is the individual responsible for setting aside the proper amount of taxes?

ThomasM125

Contributions to a Roth IRA are not taxable, only distributions would be taxable in limited circumstances. Contributions to a Roth IRA are not deductible either. If you took a distribution from a Roth IRA, only the earnings portion of a distribution would be taxable if the distribution was not a normal distribution. If the distribution was early (before the owner reached age 59 1/2) or before five years from the date the first contribution was made, then the earnings would be subject to taxes and penalties. The contributions would never be taxed upon distribution.

You would have the option of having taxes withheld when you receive a distribution, but it would not be done without your permission by the broker.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"