when is ira distribution taxable
If you receive a non-qualified distribution of earnings from an IRA and donât meet any of the tests described above, you must pay two taxes: the regular income tax plus an additional 10% early withdrawal penalty tax. Example: You contributed $2,000 to a Roth IRA. Three years later you withdraw the $2,000 plus $400 earnings to buy a new computer. Youâre under age 59Â½ and no exceptions apply. If youâre in the 25% tax bracket youâll pay $100 regular tax (25% of $400) plus $40 early distribution tax ($10% of $400).