ROTH Conversion from Rollover
Greetings,
I am new here. I was hoping for a little discussion
of some of the subtleties of ROTH and Rollover IRAs?
First off, just wanted to confirm I’m in the right place
and logged in properly to post?
Thanks,
Kenny
Ah … thank you so much.
1st thing on my mind-
I’m 71, and had a ROTH and a Rollover for about 15 yrs.
I’ve never made any conversions (even though I should have).
I haven’t made any contributions either for 7 or 8 years.
I completely understand that any conversion now will incur my current
marginal tax rate, of 22%.
My question is – will any conversion that I make now after all these years
into my ROTH from my Rollover need to sit and “age” for 5 years before I’m
subject to any kind of penalty?
Thank you kindly,
Ken
allowed a distribution without a 10% penalty?
No problem. Being over 59.5 and having held a Roth IRA for at least 5 years, your Roth IRA is fully qualified. That means any conversions you make are also immediately qualified and any Roth IRA distribution you want to take will be entirely tax and penalty free.
The above situation has existed since about 10 years ago, when you first held the Roth 5 years AND were over 59.5.
Well gosh! That’s fairly uplifting information. So if my accounts are “qualified”, will
there be any scrutiny of the proportions of each source – contributions, conversions, and
then gains? My records like 8086 & 5498 for each year since opening are completely gone
in a disaster. No good way to prove any of this. Maybe it doesn’t need to be proved.
Just takin a stab in the dark. Hoping for the best. 😉
Appreciate the thoughts,
Thank you,
Kenny
Well gosh! That’s fairly uplifting information. So if my accounts are “qualified”, will
there be any scrutiny of the proportions of each source – contributions, conversions, and
then gains? My records like 8086 & 5498 for each year since opening are completely gone
in a disaster. No good way to prove any of this. Maybe it doesn’t need to be proved.
Just takin a stab in the dark. Hoping for the best. 😉
Appreciate the thoughts,
Thank you,
Kenny
The IRS almost never asks for documentation of your holding period. They have the 5498 forms if they cared to review them. You could also request copies of statements or 5498 forms from your current Roth custodian if you have been with them over 5 years.
But again, the chances of an IRS inquiry are extremely slim, so I would not worry about lack of documentation.
Since your Roth IRA is qualified, any distributions only need to reported on line 4a of Form 1040. Form 8606 is not needed.
Well this sounds good. If its distributions are perpetually qualified, even if mostly made up of only recently converted funds (less than 5yr), that makes this ROTH IRA quite valuable.
Don’t want to, but being able to tap it (penalty free) in less than 5 sounds good. This Rollover is 80% larger than the ROTH. Small conversions of, say 25% of it per year won’t put me into a
higher bracket. Sure wasn’t looking forward to having to keep up with the various aging periods for all these activities. Now if I could just figure how to avoid paying the 22% … that
would be a magic trick to brag about. 😉
and yes, excuse the typo … 8606, and not 8086
Permalink Submitted by Alan - IRA critic on Mon, 2024-11-11 17:02
Welcome. You are logged in and can post.
What questions do you have?