What is the Roth IRA 5-year rule?

The 5-year rule requires that your first Roth IRA contribution (or conversion) must have been made at least 5 tax years before you take a distribution for it to be 'qualified.' The clock starts January 1 of the first contribution year. A qualified distribution (5-year rule met + age 59.5, disability, death, or first-time homebuyer) is completely tax-free.

What is the pro-rata rule for Roth conversions?

When you convert a Traditional IRA to Roth, the taxable portion is calculated using ALL of your Traditional, SEP, and SIMPLE IRA balances combined - not just the specific account being converted. If you have any pre-tax IRA money, a portion of the conversion will be taxable based on the ratio of pre-tax to after-tax funds across all accounts.

Does the SECURE Act 10-year rule require annual distributions?

For most non-spouse beneficiaries of account owners who died after 2019, annual distributions during the 10-year window are NOT required per SECURE 2.0 and IRS Notices 2022-53/2023-54. You may distribute any amount in years 1-9, but the entire account must be emptied by December 31 of the 10th year after death.

Is the 10% early withdrawal penalty eliminated for excess contribution corrections?

Yes. SECURE 2.0 Section 333 eliminated the 10% penalty on net income attributable (NIA) from timely corrected excess contributions, effective for corrections made on or after December 29, 2022. The NIA is still taxable as ordinary income, but no Form 5329 penalty applies.

Retirement & IRA Tax Checklist - Documents for 401(k), Roth, Inherited IRA | Monaco CPA

1099-R Distribution Documents

All Form 1099-R documents from every retirement account
Verify Box 7 distribution codes for each 1099-R (Code 1=early, 7=normal, G=rollover, Q=qualified Roth, etc.)
Box 2a (taxable amount) - if blank, determine why (rollover, basis recovery, qualified Roth)
Box 4 (federal withholding) amounts
Box 5 (employee contributions) for basis tracking

IRA Contribution Records

Traditional IRA contribution amounts for the tax year
Roth IRA contribution amounts for the tax year
W-2 Box 13 'Retirement plan' checkbox status (affects deductibility phaseouts)
Form 5498 from IRA custodians
TY2025 contribution limit: $7,000 (under 50) / $8,000 (age 50+)

Roth Conversion Records

Roth conversion amount from Traditional IRA (if applicable)
Total value of ALL Traditional, SEP, and SIMPLE IRAs as of December 31 (for pro-rata rule)
Prior year Form 8606 showing existing basis in Traditional IRA
If backdoor Roth: documentation of nondeductible contribution and subsequent conversion

Inherited IRA Records

Original account owner's name and date of death
Account type: Traditional IRA, Roth IRA, 401(k), 403(b), or other
Your relationship to the decedent (spouse, child, other)
Note: SECURE Act 10-year rule applies for deaths after 12/31/2019 (most non-spouse beneficiaries)
Year-end account balance for distribution planning

401(k) and Employer Plan Records

W-2 Box 12 Code D (401(k)) or Code E (403(b)) contribution amounts
TY2025 employee deferral limit: $23,500 ($31,000 with catch-up for age 50+)
If ages 60-63: SECURE 2.0 super catch-up allows additional $11,250 (total $34,750)
If multiple employers: aggregate deferrals across all plans against a single limit

Basis Tracking (Form 8606)

Prior year Form 8606 for basis carryforward amount
Historical Form 5498s or custodian records if prior Form 8606 was never filed
First Roth IRA contribution year (for the 5-year rule)
Excess contribution correction records if applicable

Rollover Documentation

Direct (trustee-to-trustee) rollover confirmations
If indirect rollover: documentation that funds were deposited within 60 days
Note: only one IRA-to-IRA rollover per 12-month period

NJ-Specific Items

Note: NJ taxes Roth earnings as ordinary income even if federally qualified
NJ pension exclusion documentation if age 62+ and NJ gross income $100,000 or less
Note: NJ pension exclusion does NOT apply to IRAs, 401(k)s, 403(b)s, or Keogh plans
NJ basis recovery records: W-2 Box 16 vs. Box 1 differential creates NJ basis in retirement accounts
Note: NJ allows recovery of employee after-tax contributions over first 36 months of distributions

Retirement & IRA Tax Checklist

1099-R Distribution Documents

IRA Contribution Records

Roth Conversion Records

Inherited IRA Records

401(k) and Employer Plan Records

Basis Tracking (Form 8606)

Rollover Documentation

NJ-Specific Items

Frequently Asked Questions

Related Pages

Have Your Documents Ready?

Retirement & IRA Tax Checklist

1099-R Distribution Documents

IRA Contribution Records

Roth Conversion Records

Inherited IRA Records

401(k) and Employer Plan Records

Basis Tracking (Form 8606)

Rollover Documentation

NJ-Specific Items

Frequently Asked Questions

Related Pages

Have Your Documents Ready?

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