IRS Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs)

DEFINITION of 'IRS Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs)'

 

IRS Publication 590-B is a document published by the Internal Revenue Service (IRS) specifying the rules for taking distributions from traditional and Roth Individual Retirement Accounts (IRAs). Prior to tax year 2014, Publication 590 was a single document that covered both contributions to – and distributions from – IRAs. While SIMPLE and Simplified Employee Pension (SEP) IRAs follow distribution rules that are similar to traditional IRAs, those accounts are covered in IRS Publication 560 Retirement Plans for Small Businesses.  

 

BREAKING DOWN 'IRS Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs)'

IRS Publication 590-B is divided into three chapters. Chapter 1 covers the rules for taking distributions from a traditional IRA, including distributions from inherited IRAs, when you’re eligible to withdraw or use traditional IRA assets, the guidelines for Required Minimum Distributions (RMDs), the taxation of traditional IRA distributions, and which acts may result in additional penalties or tax consequences.

Chapter 2 of IRS Publication 590-B pertains to Roth IRAs, beginning with a definition of what a Roth IRA is. This chapter goes on to explain when distributions can be made from a Roth IRA and which tax or early withdrawal penalties may apply for taking non-qualified withdrawals. Ordinarily, distributions from a Roth IRA after age 59½ are 100% tax-free. Unlike with a traditional IRA, no minimum distributions are required from a Roth account when the account owner reaches age 70½.

The third chapter of Publication 590-B covers how to get help with your taxes, including filing your return, getting a transcript of your return and checking on the status of your refund, if you’re owed one. An introductory section includes a table highlighting the differences between traditional and Roth IRAs, including the rules for RMDs, the taxation of these accounts, and the rules for filing Form 8606, which is used to report distributions from Roth IRAs, Roth IRA conversions, and distributions from traditional, SEP or SIMPLE IRAs any time after you’ve made nondeductible IRA contributions.

IRS Publication 590-B includes several worksheets. For example, Worksheet 1-1 allows you to calculate the taxable part of a traditional IRA distribution. Appendix A includes a worksheet for figuring your required minimum distributions, to be used with Appendix B, which is features life expectancy tables.

You’ll also find detailed information on when the IRS may impose penalties or additional taxes on IRA distributions, and which early distributions are exempt from the 10%  early withdrawal penalty. For instance, early distributions aren't subject to the 10% penalty if they’re used to pay for qualified higher education expenses. The penalty is also waived for IRA distributions of up to $10,000 that are used for the purchase of a first home.