If You Have Both a Traditional Balance and aRoth Balance
When you have both types of money in your account—Rothand traditional—the approaches described in the first twoscenarios are applied proportionally.
Let’s say your account has a traditional balance of $60,000 and a Roth balance of $40,000. And the Roth balance includes $15,000 in contributions and $25,000 in earnings. You take a withdrawal of $1,000 from your account. You’re 57 years old and you do not have a permanent disability. You do not roll over or transfer any of your payment into another retirement account. What portion of this distribution is considered taxable income?
First, remember that all withdrawals are taken proportionally. Your account is 60% traditional, 15% Roth contributions, and 25% earnings on your Roth contributions. Applying those percentages to your withdrawal means that the $1,000 you received is made up of $600 from your traditional balance,$150 from your Roth contributions, and $250 from the earnings on those contributions.
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