Roth IRA over 59 1/2 age requirment
In reading IRS Publication 590, pages 67-69, I cannot find anything that says or implies that simply achieving age 59 1/2 removes the holding period requirement of five years in order for a Roth IRA distribution to be qualified. The operative word seems to be “and” after the second sentence.
“A qualified distribution is any payment or distribuion from your Roth IRA that meets the following requirements.
1. It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and
2. The payment or distribution is:
a. Made on or after the date you reach age 59 1/2.”
I do realize rulings and rev. procs. can change a situation and an IRS Publication may not have been revised.
John A. Epeneter
Permalink Submitted by Alan Spross on Wed, 2009-11-11 18:08
John,
The quote is correct and there have been no changes. P 67 of Pub 590 defines a “qualified distribution” which is tax free even if earnings are being distributed. Both requirements must be satisfied.
However, a totally separate 5 year holding requirement exists for purposes of avoiding the 10% early withdrawal penalty for conversions. Attaining 59.5 eliminates that penalty. Therefore, if you do a Roth conversion at 57, you can withdraw those funds without taxes or penalty at 59.5. You do not have to wait the full 5 years because you reached 59.5 before the 5 years is up. This is also discussed on p 67 under “Additional tax on Early Distributions”.