Spend roth conversion gains post 59.5
I’m 60. If i contributed $1 to my first Roth account 6 years ago, and now 2019 I convert $100,000.
I read that first I would spend my roth contribution dollars tax/penalty free in 2020. Then I would spend my roth conversion principle penalty/tax free.
What i’m confused about, is what happens when i spend the gains from my account due to the conversion. Since the conversion wasn’t done more than 5 years ago, if i take these gains out, are they subject to tax, or penalty, or not because i’m over 59.5?
Permalink Submitted by David Mertz on Mon, 2019-02-18 18:38
Since you are over age 59½ and your first Roth IRA contribution was made for some year prior to 2015, any Roth IRA distribution that you receive in 2019 or later is a qualified distribution, tax and penalty free.
Permalink Submitted by Jon Steffen on Tue, 2019-02-19 02:34
What if I’m 60 now, NEVER contributed to a roth IRA, and now in 2019 I convert $100,000?If i spend all the principle, what are the penalty’s or taxes on the gains portion? Thanks for your help!
Permalink Submitted by Alan - IRA critic on Tue, 2019-02-19 03:21
In this situation, once you have withdrawn your conversion basis of 100k, you would be distributing gains that would be taxed at your marginal tax rate. There is no 10% penalty or conversion holding period since you have passed 59.5. However, if you can wait until you are 65 before withdrawing gains, your Roth will then be qualified and the gains will be tax free.