Roth Conversion and subsequent contributions

Submitted by John Ray on Fri, 2023-01-06 16:37

I am in my sixties and have two Roth IRA accounts as well as an IRA. The first Roth was created 8 years ago. The second one was created two weeks ago. I am thinking of doing a Roth conversion. Do I have to worry about the 5- year rule on the conversion and does it matter which Roth account I use to convert to. I plan on converting a small portion over the next few years and want to make sure I understand the requirements. In other words, will I have to consider the 5 -year rule each year when I convert. So each year I would be extending another 5 years for each converted amount?

In addition, I plan on making Roth contributions to the limit annually for myself and my wife. Her account was just created, and she is over 59 1/2 years old. She would need to satisfy the 5 year requirement but I should be all set with mine since I have had a Roth Account for more than 5 years. Correct?

Thank you for your help

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Permalink Submitted by Alan - IRA critic on Fri, 2023-01-06 16:50

Since all your Roth accounts are qualified once any one of them is qualified, you no longer are subject to any 5 year holding periods. You can convert to either Roth account or could combine them by direct transfer into one Roth account if you wanted to. Same for any regular contributions you wish to make. Further, since your Roth accounts are qualified, any distributions no longer need to be reported on Form 8606, just line 4a of Form 1040.
Regarding your wife, she still needs to track her Roth contribution basis until she meets the 5 year holding requirement and her Roth becomes qualified. But since she is over 59.5, any conversions she does do not have to be held 5 years.