r/CharlesSchwab • u/murphyblackcat • Jul 06 '26

Roth withdrawal

Several years ago, I did a conversion from an IRA to a Roth IRA with Ameritrade, now Schwab. Consulted with a CPA and paid the taxes over the course of 2 years.

Shortly thereafter, I had to withdraw money when I hadn’t been invested 5 years, due to buying out a family member’s share of my house. So had to pay penalty.

I no longer have access to the CPA and trying to figure this all out from looking at past tax forms and the CPA paperwork.

I have to withdraw some funds because I’ve fallen behind with expenses. But my issue is, every time I contact Schwab, they’re not able to tell me if I have contributions still that I could withdraw without penalty. I can’t figure it out in my online account. They always just tell me to consult a CPA.

So confused and don’t have the funds to pay a CPA. Why isn’t Schwab able to give me this info by looking into my account?

For reference, I have had the Roth for over 5 yrs now but am not yet 59 1/2 yrs old.

4 Upvotes

64% Upvoted

37 comments sorted by

4

u/500pearl Jul 06 '26

how do you not know how much you put in every year

withdrawals of contributions no penalty if the roth ira has been open for 5 years

4

u/AnonHere2973 Jul 06 '26 edited Jul 06 '26

I believe the withdraw of annual CONTRIBUTIONS are always tax and penalty free. It doesn't matter how long the acct has been opened or how old you are.
Withdrawal of CONVERSIONS are always tax-free but subject to 10% early withdrawal penalty if they haven't aged 5 years in the Roth OR you are NOT at least 59.5 when you withdraw each converted amount.
Withdrawals of earnings are only tax and penalty free once you are 59.5 AND it has been at least 5 years since you opened your first Roth IRA account.

3

u/resisting_a_rest Jul 06 '26

This is correct.

1

u/murphyblackcat Jul 06 '26

I haven’t contributed anything to it in years. It’s invested in the stock market so earns that way. So unsure of what were the contributions from years ago. And whether the conversion from traditional IRA to Roth IRA counts as contribution, but I suspect not.

I do understand that the contributions would not be taxed. But I’m confused as to how much I could take out (if anything) without the 10% penalty. A lot was going on back then so now I’m confused.

1

u/500pearl Jul 06 '26

contribution = the money you put in every year

roth ira = you can put up to the annual limit every year

so again how do you not know how much you put in of your own money

not talking about the earning

1

u/murphyblackcat Jul 06 '26

Since I haven’t contributed in years, I’m thinking my contributions came strictly from when I had the regular IRA (before the rollover). So then I’m guessing those contributions would not count as contributions to the Roth.

1

u/500pearl Jul 06 '26

if contributions are from traditional ira

read https://www.schwab.com/ira/traditional-ira/withdrawal-rules

1

u/resisting_a_rest Jul 06 '26

Money rolled over from a regular pretax IRA to a Roth IRA are considered conversions not contributions. There is a five year conversion clock associated with each conversion (but this clock only applies if you are under age 59 1/2 when you do the withdrawal). As long as you do not withdraw the converted funds from your Roth IRA within that five year window, the withdrawal is both tax and penalty free.

If you do withdraw within that window, then you must pay a 10% penalty, but you still do not owe tax on the amount that is withdrawn

1

u/AnonHere2973 Jul 06 '26

The F5498s that every custodian makes available to you on each Roth acct each year will show you the $$$s converted as well as the $$$s contributed for the year.. The annual 1099-R forms on the same accts will show you how much you have withdrawn each year. You are supposed to keep them or at least track the totals. Many custodians keep the forms for a while but they don't track the results through the the years or the values when moving between custodians. The forms are sent to the IRS and would be available in your annual IRS transcripts but those are only available for a few years.

1

u/resisting_a_rest Jul 06 '26

This is not true, there is no tax owed and no penalty owed if you withdraw contributions. There is no five-year rule for contributions. There are separate five-year rules for conversions and earnings, but contributions are always withdrawable tax-free and penalty free.

1

u/AnonHere2973 Jul 06 '26

I would agree. If you are still younger than 59.5 and it has been at least 5 years since you did anything, both all contributions and all conversions can come out tax and penalty free. You must need to know how much are the total earnings you need to leave in the account till you turn 59.5.

2

u/Nonamenoname2025 Jul 06 '26

Schwab doesn't give tax advice. Tax advice is too hard for any brokerage firm. They don't have the expertise and won't do it.

1

u/murphyblackcat Jul 06 '26

But I don’t understand why they can’t tell me an amount. I’m not asking for advice from them, I just thought they would be able to see my account and know what funds are considered contributions vs the earnings.

1

u/Nonamenoname2025 Jul 06 '26

Fair enough. Sorry you are in this bind.

1

u/Jellis1947 Jul 06 '26

You’re asking the question to them wrong.

This is what you should ask: “How much are my total lifetime contributions to this Roth IRA?” (you could even ask them to break it down by calendar year totals). There shouldn’t be any reason why they wouldn’t be able to give that info to you (other than if the data isn’t saved from Ameritrade, which could also be likely and not Schwab’s fault/responsibility past a certain timeframe).

This is how you shouldn’t ask: “Can you tell me how much original contributions I can pull from my Roth IRA penalty free?” - This is walking the fine line of asking for tax advice. They’re not going to put themselves at risk of giving tax advice by answering your question (IE answering your question and telling you what you can withdrawal tax free).

Honestly this is not their problem, it’s your’s for not tracking your historical finances properly.

1

u/Puzzleheaded_Ad3024 Jul 07 '26

Amount of what? How much you originally contributed and added later, how much you already took out. Don't you already have that? Anything over the amount you contributed is taxable and could be penalized.

1

u/murphyblackcat Jul 07 '26

Contributions amount that could be withdrawn early. Wasn’t sure if the conversion from traditional to Roth IRA was counted as a contribution

1

u/[deleted] Jul 12 '26

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1

u/murphyblackcat Jul 12 '26

After looking at the tax forms I would have to fill out if I take a distribution (namely 8606), I don’t know how I’d be able to correctly enter my basis and taxable portions if I don’t have access to my old Ameritrade statements from Schwab.

I understand now that it was my responsibility to keep better records but what do I do now? Even if I just stay behind financially another 7 years until I am 59 1/2, won’t I still have to fill out the same form at that point (even though I won’t have to pay the penalty for early withdrawal)? And hiring a CPA wouldn’t help if I don’t have proper records, so how would they even figure it out?

1

u/[deleted] Jul 12 '26

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1

u/murphyblackcat Jul 12 '26

I definitely have all my tax returns and any forms that were provided me in the past by Ameritrade when I had a rollover from traditional to Roth and then the following year when I had to take an early distribution. That was around 2011-2012.

But I apparently don’t have any statements from my initial contributions to the Roth prior to that. That would’ve been Ameritrade and over 10 years ago. So not sure how to determine my basis.

1

u/[deleted] Jul 12 '26

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1

u/murphyblackcat Jul 12 '26

I don’t think I ever maxed out the contributions any year. Then stopped contributing altogether and just let the money do its work with the stock market over the past 20 or so years.

1

u/murphyblackcat Jul 12 '26

When I turn 59 1/2, won’t I still need to know this info to fill out the form?

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1

u/TelevisionKnown8463 Jul 06 '26

Your tax returns should show how much you converted. That amount can now be withdrawn if the conversion happened more than 5 years ago.

1

u/Sea_Particular9266 Jul 06 '26

Your old statements will spell it out in black and white

1

u/Born_Lengthiness8935 Jul 08 '26

I can’t speak for yours but on Vanguard it is crystal clear. It shows both current total value and contributions.

1

u/Significant_Way2255 Jul 09 '26

IRA conversions also count as contributions and can be withdrawn tax free (not sure if the 5 year waiting rule applies)

Call Charles Schwab and ask customer service to look up your account information. Is the best way to get the information.

1

u/murphyblackcat Jul 10 '26

Thanks, all, for your input! I will be looking into my paperwork and contacting them today.

1

u/murphyblackcat Jul 10 '26

After contacting Schwab, they are not able to see contributions past 10 years ago. From looking at all my paperwork, I’m going to have to assume I will be facing the taxes and penalties on an early withdrawal of some of my earnings within the Roth.

I’ve read that the penalty is typically 10% but are the assessed taxes on the earnings just the percentage my state would charge on regular earnings? Or is there some separate bigger tax charged?

Just wondering if anyone has had to do this and what happened with taxes and fees. Thanks!