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. Recharacterization

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

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

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

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

    An individual retirement plan that bears many similarities to ...
  6. Spousal IRA

    A type of individual retirement account that allows a working ...
Related Articles
  1. Tax Treatment Of Roth IRA Distributions
    Taxes

    Tax Treatment Of Roth IRA Distributions

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

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

  3. Is my non-qualified Roth IRA distribution ...
    Retirement

    Is my non-qualified Roth IRA distribution ...

  4. 5 Ways To Stretch Your Retirement Budget
    Budgeting

    5 Ways To Stretch Your Retirement Budget

comments powered by Disqus
Hot Definitions
  1. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
  6. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
Trading Center