Roth Conversions over 59 1/2
I have been told that if you convert 100k for example to a Roth from a traditional IRA you can withdraw up to the 100k converted during the first 5 years since you have already paid taxes on this initial 100k.
In this example there were no prior Roth funds.
Can anyone provide me a clear answer.
Thanks.
Permalink Submitted by Alan Spross on Tue, 2007-09-25 20:15
After age 59.5, any conversion amounts can be distributed tax and penalty free, so conversions that had not completed the 5 year holding period become penalty free at age 59.5.
Regular contributions (none in this case) are always distributed first, then conversions and earnings last. If the conversion were first distributed tax free and earnings also withdrawn, the earnings would be subject to ordinary income tax until the 6th year from the first Roth of any type, but no penalty beyond 59.5.