Roth Conversion 5-year rule

Submitted by Richard Nelson on Fri, 2024-09-20 15:17

I’m 68 and have had Roth IRA’s since they first came out many years ago. Each of the last 3 years I have done a Roth conversion within my Fidelity account. Not planning to take any distributions from these converted Roths, but you never know. Being over 59 1/2 I know the 5-year rule would not apply regarding the contribution part, but what about the earnings portion? Do I need to be keeping track of the earnings in the unlikely event of needing to take distributions from these converted Roths? After doing the Roth conversion at fidelity last year, I transferred some of the converted Roth funds to another Roth account I had set up at a Bank paying high interest rates. Would this be a problem regarding the 5-year rule? Thank you.



Submitted by Alan - IRA critic on Fri, 2024-09-20 17:18

No problem. Your Roth IRAs are now all qualified with any distributions being tax and penalty free. You no longer need to track your Roth IRA basis or report distributions on Form 8606. But they do go on line 4a of Form 1040.

Submitted by Richard Nelson on Fri, 2024-09-20 17:45

Thanks so much, that’s a relief. You have been really helpful since I retired and had to do all these IRA transactions. It’s unreal how much incorrect information is out there on the internet. Even on Fidelity’s website.

Submitted by Thom Kirer on Mon, 2024-09-23 08:56

I’m confused.  Richard stated that he executed some Roth conversions over the last 3 years.  So why/how does Alan say that those Roth’s do not need to maintain the 5 year ‘wait’ period before the earnings become tax free.

Submitted by Alan - IRA critic on Mon, 2024-09-23 10:43

Because he indicated that he has had Roth IRAs since they first came out.

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