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A Roth IRA basis is the amount the IRS treats as already contributed or otherwise accounted for when determining how a withdrawal is taxed. It is not the account balance: investment earnings are a separate category, and the tax treatment of a withdrawal depends on whether it is qualified and on the IRS distribution-ordering rules.
What Roth IRA basis means
Basis is a tax-recordkeeping figure associated with amounts in a Roth IRA, including regular contributions and certain conversion or rollover amounts. It helps determine which category a distribution is treated as coming from. A Roth IRA’s current value does not tell you its basis or, by itself, how much of a withdrawal may be taxable.
For federal tax purposes, a return of regular Roth IRA contributions is not included in gross income. Qualified distributions are also generally excluded from gross income. A distribution that does not qualify is handled under the ordering rules below; reaching a particular category does not, by itself, answer every tax or additional-tax question.
How the IRS orders a nonqualified withdrawal
For a distribution that is not qualified, the IRS applies a set order rather than treating each withdrawal as a proportional share of the account. Publication 590-B (2025) describes the sequence as follows:
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- Regular contributions: counted first.
- Conversions and rollover contributions: counted next, generally starting with the earliest year. Within an applicable conversion or rollover amount, the taxable portion is counted before the nontaxable portion.
- Earnings: counted after contributions and conversion or rollover amounts.
The rules aggregate distributions from all of your Roth IRAs for the year and aggregate relevant contribution amounts. The sequence is not calculated separately account by account. See IRS Publication 590-B (2025) for the distribution rules.
Qualified distributions and the two five-year rules
A qualified distribution is a separate category from a nonqualified withdrawal. The qualified-distribution test includes a five-year period and other conditions, such as age or an eligible reason for the distribution. A separate five-year rule may apply to the taxable portion of each conversion or certain rollover amounts distributed early; an additional 10% tax may apply, subject to exceptions.
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These are distinct rules, not one universal five-year waiting period. The relevant outcome can depend on the distribution reason, your age, the year of each conversion, and other facts. Publication 590-B explains both the qualified-distribution requirements and the conversion-related rule.
Where Form 8606 fits
Form 8606 is the key IRS form for reporting certain IRA transactions. Part III of the 2025 form, “Distributions From Roth IRAs,” asks for basis in Roth IRA contributions and, where applicable, basis in conversions from traditional IRAs and rollovers from qualified retirement plans to a Roth IRA. Whether you need to complete it depends on the transaction and circumstances specified in that year’s form and instructions.
Use the form and instructions for the tax year on your return. The details here about Part III refer to the 2025 Form 8606, reproduced in Publication 590-B (2025). For contribution rules, the IRS directs taxpayers to Publication 590-A. The IRS publication page identifies the current versions of Publication 590-B and the related Publication 590-A; check the applicable tax-year materials for later returns.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What to check before estimating a withdrawal’s tax treatment
- Whether the distribution meets the qualified-distribution requirements.
- How much of your aggregated Roth IRA distributions is treated as regular contributions, conversion or rollover amounts, and earnings.
- For conversions or rollovers, the year and taxable or nontaxable portion of each amount.
- Whether the distribution or transaction requires Form 8606 for the tax year involved.
Without a transaction history and the facts relevant to the applicable tax year, a basis figure alone is not enough to calculate an individual withdrawal’s tax consequences.
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