IRA Conversion to Roth IRA
I’ve been retired for more than 10 years. I would like to convert one of my IRAs to a Roth IRA and have two questions:
1. Do I have to have my new Roth in force for 5 years before I can take out money?
2. Can I put all of the converted IRA funds into the new Roth IRA and pay any taxes due on the conversion out of non-IRA funds?
Thanks,
John
Permalink Submitted by Alan - IRA critic on Sat, 2021-02-20 14:40
No, if you are over 59.5, you can take out all your conversions anytime, tax and penalty free. As for taxes on the conversion, it is preferable to pay them with non IRA funds, instead of reducing the amount converted due to withholding from the IRA distribution. For earnings on your conversions or regular contributions to be tax free, you must be over 59.5 and have held the Roth for 5 years.
As for the amount you convert, you should avoid converting an amount that will push your taxes on the conversion into a bracket higher than what you expect to pay in future years. The optimal amount is not likely to be the same as the current balance in a specific TIRA account.