In this case, your distribution will be "nonqualified". The withdrawal will be made according to the "ordering rules" explained below.

1. The first money that will come out of the Roth IRA account is your non-deductible contributions. These are always tax- and penalty-free.
2. Next to be distributed will be any conversion dollars that you were taxed on at the time of conversion. You won't be taxed on these again, but you will have to pay a 10% penalty on this amount except under certain circumstances, including:
   
   
   • Significant unreimbursed qualifying medical expenses
   • Paying medical insurance premiums after losing your job
   • Disability
   • Death
   • If you take the payments as an annuity, that is, a series of substantially equal payments over your lifetime or life expectancy.
   • To pay for qualified higher education expenses
   • To pay certain qualified first-time homebuyer amounts
   • If the money is rolled over into a new IRA
   
   (For details please see Pub 590.)
   
   
3. Next to be distributed will be conversion dollars that were not taxable at the time of conversion. You won't have to pay any tax or penalty on those.
4. Finally, any remaining money is considered to be earnings. You will have to pay tax on those earnings, and a 10% early distribution penalty, unless you meet one of the exceptions.