To help fund my early retirement I would like to withdraw direct contributions to my Roth IRA and Roth-converted principal without incurring a tax penalty for early withdrawal. The Roth-converted principal is from Roth 401k/IRA conversions of after-tax 401k contributions and Roth conversions of traditional IRA contributions. My understanding is that, even if I’m less than 59.5 years old, I can 1) withdraw direct contributions without penalty as long as my Roth IRA account is at least 5 years old, which it is, and 2) withdraw converted principal from a Roth IRA without penalty if the conversion was made at least 5 years prior to the date of withdrawal. Of course, to avert early withdrawal penalties, I would need documentation to show the IRS that I meet these requirements in the event of an audit. That’s where I’m hoping to get the benefit of the lived experience of other FIRErs.
Has anyone here 1) withdrawn Roth direct contributions or converted principal before turning 59.5 years old and 2) been audited by the IRS? If so, I would like to know which documents were most helpful for convincing the IRS that you didn’t owe early withdrawal penalties.
The documentation that I have and plan to use for this purpose is listed below:
1) Direct Roth IRA contributions: Form 5498 and/or year-end statements for my Roth IRA going back to the first year I made a direct contribution (well over 5 years ago).
2) Mega back-door Roth 401k/IRA: After-tax 401k contributions converted almost immediately to Roth in-plan and then rolled over to a Roth IRA within a year or two of the in-plan conversion:
· After-tax 401k contributions converted to Roth in-plan: Form 1099-R with the nontaxable amount of the distribution in Box 5 and letter “G” in Box 7
· Rollover of Roth 401k money to Roth IRA: Form 1099-R with nontaxable amount of the distribution in Box 5 and the letter “H” in Box 7
3) Standard back-door Roth IRA (contributions to traditional IRA converted to Roth in the same year as the contribution): Form 5498 and 1099-R for traditional IRA
TIA for any help you can provide!
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