Ordering Rules

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

BREAKING DOWN '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.

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RELATED FAQS
  1. Is my non-qualified Roth IRA distribution subject to taxes or early distribution ...

    The ordering rules must be applied to determine whether the distribution is subject to income taxes and/or the early distribution ... Read Full Answer >>
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    The short answer is yes, if you haven't reached age 62 by December 31, 2015. The Bipartisan Budget Act of 2015 disrupted ... Read Full Answer >>
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    With uncertainty about the sustainability of Social Security benefits for future retirees, a lot of responsibility for saving ... Read Full Answer >>
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    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
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