Roth conversion distribution before 5 years.
A Roth IRA(only one) was started in December 2011 with a partial conversion of a Traditional IRA(only one)which included non-deductible contributions. A second partial conversion was made into this Roth in Dec. 2012 from the same Trad.IRA (including non-deductible contributions).
At the present time this Roth consists only of the two conversion amounts and the earnings. There have been no direct contributions to it. The owner turns age 59 1/2 in mid-July of 2015.
Can the owner withdraw the entire Roth balance at age 59 1/2 tax and penalty free even though the Roth was started less than 5 years ago?
Permalink Submitted by Alan - IRA critic on Tue, 2015-02-10 17:32
The 10% penalty for distributions of pre tax conversion dollars held less than 5 years or on earnings goes away at 59.5. However, since the Roth will not be qualified until 1/1/2016, a distribution before that which is large enough to tap the earnings would be subject to taxes on the earnings distributed. But earnings come out last so there would be no taxes on distributions limited to the amount converted.