Taking distributions from a Roth
But let’s get back to whether any CRD you take from your Roth will be taxable at all. First, if you are age 59 1/2 or older and have had your Roth IRA for at least five years, then all funds withdrawn from your Roth IRA, including any earnings, are “qualified distributions” and can be withdrawn tax- and penalty-free. In this case, any CRD you take from your Roth will be tax free, but you still get to withdraw it, use it for what you need, and have three years to return it to your Roth IRA, if you choose.
You state that you need to take $25,000 and have basis of $15,000. You also state that your Roth balance is around $100,000, so I am thinking that you have more basis than you think, unless you are saying you’ve earned $85,000 on your original $15,000 Roth IRA contributions. If that is the case, then I should be writing you for advice!
For other readers, basis means funds that have already been taxed and can be withdrawn tax-free. In a Roth IRA, basis can include both Roth IRA contributions and Roth conversions. I will assume you mean that the $15,000 you say is basis, is really the amount of Roth contributions you’ve made, and most of the rest might be from Roth conversions.
The way distributions from Roth IRAs work is that the first dollars out are deemed to come from Roth IRA contributions if you have made any. Your original Roth contributions can be withdrawn any time for any reason tax- and penalty-free. Once you have withdrawn all your Roth contributions, the next dollars out come from your Roth conversions. These will be tax free as well, since you paid the tax when you converted these funds. The last dollars out would be the earnings on all your Roth funds.
If you are under age 59 1/2 or have not held the Roth for five years, and assuming your first $15,000 came from Roth contributions, then those funds are tax-free coming out. But now you need another $10,000, because you said you needed $25,000 in total. If any part of those funds is also from Roth contributions, then they are tax free as well. That will likely be your case. If so, then there won’t be any tax on the CRD you take from your Roth IRA.