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.
Permalink Submitted by Robert Wright on Wed, 2024-06-05 02:04
Thank you.