How to un-tangles Roth IRA and Converted Roth funds after retirement

Submitted by Shailesh Patel on Wed, 2018-08-29 17:29

I am 66 years old retiree. I had a Roth IRA account since 1997 with 200K balance. In January 2018, I converted 50K my regular IRA into this Roth account. I have started taking distribution from Roth in 2018, not realizing that there is 5-year wait for taking distribution (with-out penalty + tax) on this converted Roth amount and earnings. This Roth account has earnings every month.

I would like to separate these two Roth funds and its earnings into two separate accounts, so that in future I can easily report to IRS and do not get penalized for 2018 distributions.

My goal is to set up Roth conversion ladders accounts for future income.

Can you help? How can this be accomplished?

Thank you very much for helping me on this Roth mix up.

Best Regards,

SP



Submitted by David Mertz on Wed, 2018-08-29 19:22

  • There is nothing that needs untangling.  Since you are over age 59½ and have had a Roth IRA for well over 5 years, *any* regular distribution you make from any of your Roth IRAs is a qualified distribution, tax and penalty free.  The 5-year rule for conversions does not apply to anyone over age 59½.
  • Since any distribution you receive from a Roth IRA is a qualified distribution, no reporting is required for it on Form 8606.  It will only appear on (2018 and later) Form 1040 line 4a and will be excluded from line 4b.

Add new comment

Log in or register to post comments