Roth Distribution
Client is 40. Converted IRA to Roth in 1998. No contributions since. Can he take conversion amount tax and penalty free?
Client is 40. Converted IRA to Roth in 1998. No contributions since. Can he take conversion amount tax and penalty free?
Permalink Submitted by Alan Spross on Mon, 2008-02-04 21:19
Yes, he can. This would be reported on Form 8606. Down side is that distributing a large part of one’s Roth eliminates future tax free earnings on those funds.
If he leaves the accrued earnings since 1998 in the account, they will be tax free when he hits 59.5, since he has already met the 5 year holding period.