Ordering Rules

AAA

DEFINITION of 'Ordering Rules'

The order in which Roth IRA assets are distributed. Assets are distributed from a Roth IRA in the following order:

1. IRA participant contributions
2. Taxable conversions
3. Non-taxable conversions
4. Earnings

INVESTOPEDIA EXPLAINS 'Ordering Rules'

This set of rules is used to determine the applicable tax treatment of a nonqualified Roth IRA distribution.

Under the aggregation and ordering rules, all of an individual's Roth IRAs are treated as a single account.

RELATED TERMS
  1. Non-Qualified Distribution

    1) A distribution from a Roth IRA that occurs before the Roth ...
  2. Recharacterization

    The treatment of a contribution as being made to another type ...
  3. Reconversion

    A method used by individuals to minimize the tax burden of converting ...
  4. Required Minimum Distribution - ...

    The amount that Traditional, SEP and SIMPLE IRA owners and qualified ...
  5. Triggering Event

    1. A tangible or intangible barrier or occurrence that, once ...
  6. Roth IRA

    An individual retirement plan that bears many similarities to ...
Related Articles
  1. Taxes

    Tax Treatment Of Roth IRA Distributions

  2. Retirement

    Roth Vs. Traditional IRA: Which Is Right ...

  3. Retirement

    Is my non-qualified Roth IRA distribution ...

  4. Retirement

    Can I purchase mutual funds for my IRA?

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center