Roth Conversion

Submitted by Craig Wong on Wed, 2022-08-24 18:33

Making sure I understand Roth Conversion rules….individual is 62 years old and has some Roth IRA money left (Roth is over 5 years old) and some other funds which if withdrawn monthly should deplete by mid 2024. If individual does a Roth Conversion now and does so annually for next 4-6 years, in 2024 when these conversion contributions are almost two years old, can the individual withdraw those conversion amounts tax-free/penalty-free (not earnings) because he paid the taxes on those for 2022?
My thought is he is over 59 1/2 so he automatically avoids a 10% penalty but he shouldn’t have to wait five years because he is only pulling out conversion amounts he paid taxes on. I can’t seem to find anywhere that specifically talks about this scenario, so I am asking here. Appreciate any help in advance.



Submitted by David Mertz on Wed, 2022-08-24 18:49

  • Because he is over age 59½ and it has been more than 5 years since the beginning of the year for which he first made a Roth IRA contribution, his Roth IRAs are qualified and *any* distribution (except of an excess contribution and allocable earnings) from his Roth IRAs are tax and penalty free, including any converted amounts and earnings distributed.  (§ 408A(d))
  • The 5-year conversion clock no longer applies after age 59½ because the conversion clock only determines whether or not a distribution of a converted amount is subject to an early-distribution penalty.  Distributions after age 59½ are not subject to any early-distribution penalty.


Submitted by Craig Wong on Wed, 2022-08-24 19:06

That’s what I thought….thanks for the reply.  



Submitted by Richard Nelson on Wed, 2022-08-24 19:17

Late in my career (jan 1 2020) my employer introduced a Roth 401k.This was in  addition to the traditional pretax 401 k we had for years. Monies were kept in separate accounts. We could now choose the amount we wanted going into either roth or traditional 401k. I’ve had many roth Ira’s over the years at various financial institutions. I began putting most of my earnings into the employer roth 401k and retired in late 2020 at 64 years old. Last week I did a direct rollover (trustee to triustee) rolling all the money out of my employer 401k roth account and into my existing roth ira at fidelity. Does this transfer look legit ?



Submitted by Alan - IRA critic on Wed, 2022-08-24 19:41

Not a problem. If your first Roth IRA has been held 5 years  (your first contribution was in 2017 or earlier), the entire balance in your Roth IRA including the direct rollover of the Roth 401k will be qualified and entirely tax free. 



Submitted by Richard Nelson on Wed, 2022-08-24 20:30

Thanks for confirming it was correct. These can really be a minefield. I read Ed’s book . The new retirement savings time bomb. Every retiree needs to read that book or have a adviser that has read it.



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