Are Roth distributions counted as income?
I am 60 years old and looking to withdraw Roth funds from my 401(k) and IRA. I know that Roth distributions are tax free, but is the distribution added to my income when I file income taxes? In other words, is a Roth distribution counted as income (added to my overall income)?
Roth distributions are tax free and not counted as income. You stated above that your were going to "withdraw funds from my 401(k) & IRA." Are those Roth 401(k) & Roth IRA? Because if you are talking about "converting" your before tax 401(k) and Regular/Rollover IRA into a Roth, then that whole conversion is taxable.
I would think long and hard before doing that. Many advisors do like that approach, but usually the math doesn't play out due to the loss of compounding the portion you paid in tax. I would almost always take a current tax deferral or deductions than pay now in order for a future tax benefit. You never know what the rules may be.
Best of luck.
This is directly from the IRS website: https://www.irs.gov/publications/p590b/ch02.html#en_US_2015_publink1000231061
Are Distributions Taxable?
You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. You may have to include part of other distributions in your income. See Ordering Rules for Distributions , later.
Basis of distributed property. The basis of property distributed from a Roth IRA is its fair market value (FMV) on the date of distribution, whether or not the distribution is a qualified distribution.
Withdrawals of contributions by due date. If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them. If you have an extension of time to file your return, you can withdraw the contributions and earnings by the extended due date. The withdrawal of contributions is tax free, but you must include the earnings on the contributions in income for the year in which you made the contributions.
What Are Qualified Distributions?
A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.
It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and
The payment or distribution is:
It shouldn't be. You already had to count those funds once for tax purposes, in the year you contributed.