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. I Was Intimidated By Investing, But ...
    Investing Basics

    I Was Intimidated By Investing, But ...

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center