5 year holding if starting new account

Submitted by Toby H on Fri, 2010-03-19 20:50

I am trying to seach but am having no luck. If a person over 60 started a ROTH 2 years ago and now is opeing another with a new custodian, does the new account have only a 3 year wait?

Thanks in advance



Submitted by Alan Spross on Fri, 2010-03-19 20:59

Yes, both the new account and the original account have 3 years to go before both are qualified. The 5 year holding period is measured starting Jan 1 of the year for which the first Roth contribution applies.

Example: First Roth contribution made 4/1/2006 FOR 2005 year.
5 year holding period starts 1/1/2005 (15 months before you even made a contribution).
Roth is qualified as of 1/1/2010.
If a new Roth contribution for 2009 is made, it does not matter if it is made to the original account or to an entirely new Roth account. The holding period for ALL Roths started 1/1/2005.

The other 5 year conversion holding requirement does not apply to conversions made earlier or later once the taxpayer reaches 59.5.

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