5 year Roth Question (yes, another one)
A person contributed money to a Roth in 2012, then distributed it in 2014. Have they already satisfied the 5 year rule if they contribute to a new Roth acct in 2021, and they’re older than 59.5?
A person contributed money to a Roth in 2012, then distributed it in 2014. Have they already satisfied the 5 year rule if they contribute to a new Roth acct in 2021, and they’re older than 59.5?
Permalink Submitted by Alan - IRA critic on Thu, 2021-12-02 21:53
Yes, the 5 year period starts with the year the first allowed contribution is for (2011 or 2012 here), and ends at the end of the 5th year following that first contribution. Therefore, the 5 year period has long since been satisfied in this case and the Roth is qualified as soon as any new contribution is made. The 5 year period is more of a waiting period than a holding period since years in which there is no Roth balance still count in completing the 5 year period. That said, the period only starts with a legal contribution. If that first contribution was an excess contribution due to modified AGI being too high, that contribution does not start the clock.