roth rules of withdrawal
I have a client who opened an Roth IRA 10 years ago and closed it last year. Their income is down now and would like to establish a Roth. Would the 5 year clock start with this one or because they had a Roth for over 5 years prior would that count as the first account opened. Thanks
Permalink Submitted by Alan - IRA critic on Fri, 2016-04-08 22:34
The 5 year holding period starts with the year of the first contribution and that does not change or start over even if there is no balance for a period of time. In the event that client had a loss when the Roth was closed last year, he should use the Worksheet for line 22 of Form 8606 in the 8606 Inst. to determine how much Roth basis remains coming into the current year. However, if he used that basis for an itemized deduction last year, his basis is 0 coming into the current year.