Early conversion
If you convert from an Rollover IRA to a Roth at age 54(before 591/2)will you have the 10% early distribution penalty?
TKS
SC
If you convert from an Rollover IRA to a Roth at age 54(before 591/2)will you have the 10% early distribution penalty?
TKS
SC
Permalink Submitted by Alan Spross on Fri, 2010-06-25 21:24
No, there is no early withdrawal penalty for the conversion itself, just ordinary income tax. However, if you then take a distribution from the Roth conversion before either 59.5 or completion of a 5 year holding period, the 10% penalty will be triggered.
The affect of this rule is to eliminate doing a Roth conversion and then taking the funds out of the Roth as a way of avoiding the 10% penalty.
Permalink Submitted by steve jackson on Sat, 2010-06-26 13:59
Thank you Alan