5 Year Clocks for Roth contributions and conversions
If I convert TIRA money in 2024 to a Roth IRA I started 7 years ago (2017) via Roth contributions, does the 2024 converted TIRA money share the same 5 year clock as the Roth contributions I made in 2017?
So, my 5 years clock for Roth contributions starts 1/1/2017.
Is 1/1/17 the start of the 5 year clock for TIRA conversion in 2024?
I’m also considering converting a pre-tax 401(k) to a Roth IRA this year, 2024.
Would this conversion of a pre-tax 401(k) have it’s own, separate, 5-year clock or would it be the same 5-year clock as the Roth IRA I started in 2017?
Thank you in advance for your help.
Permalink Submitted by Alan - IRA critic on Tue, 2024-06-04 16:51
The 5 year clock for Roth distributions to be qualified starts 1/1/2017. This relates to income tax on Roth gains, which come out last.
The other 5 year clock applies to each conversion with respect to the 10% penalty only. These clocks will stop at age 59.5 even if not completed.
Both 2024 conversion and a 401k to Roth rollover clocks start 5 year conversion holding periods on 1/1/2024. Your regular Roth IRA contributions come out first regardless of the year made and are tax and penalty free anytime you want to distribute them.