Five-Year Rule on Post 60 Roth Conversion
I am 60 and have three separate Roth IRA accounts that contain Rollover IRA conversions made on 4/2/09, 4/3/09, and 1/15/10. I plan to make one of more additional Roth conversions in each of the next few years. I believe I can withdraw, at any time, the amounts converted without penalty or interest. My question concerns the earnings from these accounts. When can I withdraw my earnings tax free? More specifically, is there one date on which I can withdraw ALL earnings, or will there be different tax-free-earnings withdrawal dates based on the date of each conversion? If it maters, I have only Roth conversions and no Roth contributions.
Permalink Submitted by Alan Spross on Tue, 2010-01-26 19:49
If your first Roth account was opened in 2009, then your earnings will not be tax free until 1/1/2014. After 2013, all your earnings will be tax free regardless of which conversion produced them.
Also, if you want to use each year’s marginal tax bracket for conversions, you would probably opt out of the two year deferral on this year’s conversions and simply report each year’s converted amount in the year of the conversion like you will do for your 2009 conversions.
You are correct that all your early withdrawal penalties and conversion holding periods to avoid those penalties ended at age 59.5.