Distribution Rules

What are the key differences between Traditional and Roth IRA distributions?

• Traditional IRAs (including Rollover IRAs) have taxable withdrawals and require Required Minimum Distributions (RMDs) starting at age 73 (or 72 if you reached that age before January 1, 2023).
• Roth IRAs offer tax-free qualified withdrawals and do not require RMDs during the original account holder’s lifetime.

When can I withdraw from a Traditional or Rollover IRA without penalty?

Withdrawals can be made without a 10% early withdrawal penalty once you reach age 59½, though the amount withdrawn will still be taxed as ordinary income.

What happens if I take a distribution from a Traditional or Rollover IRA before age 59½?

If you are under age 59½, an early withdrawal is generally subject to a 10% penalty in addition to ordinary income taxes. However, certain exceptions apply.

What are the exceptions to the 10% early withdrawal penalty for Traditional or Rollover IRAs?

• First-time home purchase (up to $10,000).
• Qualified education expenses for you, your spouse, children, or grandchildren.
• Permanent disability.
• Unreimbursed medical expenses exceeding 7.5% of your adjusted gross income (AGI).
• Health insurance premiums after 12 consecutive weeks of unemployment.
• Substantially equal periodic payments as defined by the IRS.

What makes a Roth IRA distribution “qualified”?

A Roth IRA distribution is considered qualified if it occurs after a 5-tax-year period beginning with your first Roth IRA contribution and one of the following applies:

• You are age 59½ or older.
• The distribution is made to a beneficiary after your death.
• You become disabled.
• The withdrawal is used for a qualified first-time home purchase or is part of a series of substantially equal periodic payments.

Before making a withdrawal, it is recommended to consult with a licensed tax advisor. Webull does not determine or provide guidance on which distribution type is applicable to your individual tax situation. For more information about distributions and the relevant rules, please visit irs.gov.

What is a Required Minimum Distribution (RMD)?

An RMD is the minimum amount you must withdraw each year from certain retirement accounts to prevent indefinite tax deferral. RMDs apply to Traditional, Rollover, SEP, and SIMPLE IRAs but not to Roth IRAs while the original owner is alive.

To learn more about RMDs please visit irs.gov.

When do I have to start taking RMDs?

• If you reached age 72 before January 1, 2023, RMDs began at age 72.
• If you reached age 72 after December 31, 2022, RMDs begin at age 73.

How is my RMD amount calculated?

The IRS calculates your RMD using your prior year-end account balance and your life expectancy from published tables. Not taking your full RMD on time may result in IRS penalties. For more details, visit irs.gov.

Webull Financial does not offer tax advice. Any integration with third-party tax software is provided for informational purposes only. For any questions about taxes, including how to file, please contact a tax professional.