Roth IRA Distribution Rules Questions
Hi–I have a few questions regarding Roth distributions that I hope you would indulge me in answering please. I am 61 years old currently. In 2020, I opened a Traditional IRA and funded it with a QDRO (divorce) rollover and also made a contribution of $4,000. In 2021, I opened a ROTH IRA and made a 2020 contribution of $3,000. And a 2021 contribution of $4,000. In 2021, I also opened a second ROTH IRA and contributed $3,000 for 2021. I did a partial ROTH conversion of $57,895.30 from the Traditional IRA to this second ROTH.
In 2022, I did another partial ROTH conversion of $34,972.14 into this second ROTH, no contributions to either ROTH.
In 2023, I contributed $1200 to the first ROTH and $6300 to the second ROTH along with a ROTH conversion of $4,240.50 to this second ROTH.
My questions
- I believe I can remove the amount of the contributions at any time. Is that correct?
- Since I made a contribution in 2021 when I opened the first ROTH for 2020–I believe my 5 year clock started on 1/1/2020 and I would be eligible to take distributions in 1/1/2025?
- What do I have to show the IRS in order to prove the clock start date?
- Do the Roth conversions restart the clock since they were started in 2021? Does each partial conversion have to be 5 years old in order to be distributed and how can I tell which money is from which conversion since its all lumped together now or is it treated all as one conversion clock at the time of the first conversion?
- How do I take ROTH distributions–IRS forms/bank forms required to be completed first? Thank you so much in advance for reading this long email and answering. Much appreciated.
Permalink Submitted by Alan - IRA critic on Tue, 2024-04-09 16:59
Yes, you can distribute your regular contributions anytime without tax or penalty. And because you are over 59.5, you can also distribute all your conversions without tax or penalty, but you will have to report distributions on Form 8606 until 2025.
Correct. Your Roth IRAs are all qualified as of 1/1/2025, entirely tax free.
Nothing unless they ask. Keep your 5498 or an account statement showing that you made a contribution for 2020 in the unlikely chance the IRS would inquire.
Conversions no longer have a 5 year holding period after age 59.5 and they do not restart the 5 year holding period from your first Roth contribution. But until 2025 you must keep track of your total regular contributions and conversions since these totals must be shown on Form 8606 should you take a distribution prior to 2025. Starting in 2025 Form 8606 is no longer needed.
Depends on your Roth custodian. Most do not require a form completion to take a distribution.