Opening a Roth IRA
Must a Roth IRA be open by CONTRIBUTION, or can you also employ a CONVERSION to accomplish this task?
if both methods are available, what are the pros and cons for each?
Thank you.
Must a Roth IRA be open by CONTRIBUTION, or can you also employ a CONVERSION to accomplish this task?
if both methods are available, what are the pros and cons for each?
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2023-07-19 15:18
Either one. The first regular Roth contribution or the first conversion will start the 5 year holding period. However, a conversion is usually taxable (Unless your basis % from non deductible contributions is high). And a conversion is subject to it’s own 5 year holding to avoid a penalty if you withdraw the conversion in the first 5 years and are under 59.5.