Conversion from Rollover IRA to more than 5 Year old ROTH
My wife and I have a running discussion about the hold period of 5 years if a conversion from and old IRA into an old ROTH still requires a holding period of 5 years. Fidelity says NO- Wife says YES ????? Lets hear it!!!!!
Permalink Submitted by Alan Spross on Tue, 2010-04-20 21:44
Wife wins this one. Each separate conversion has a 5 year holding period for purposes of the early withdrawal penalty. It does not matter whether the conversion is made to a new Roth or old one.
That said, there are several exceptions that will waive this penalty, the most common being reaching 59.5. There are others as well, and they are listed on p 64-66 of Pub 590.
Fidelity must have misunderstood the question; they usually are knowledgeable on IRA related matters, and in addition I presume that most of these firms have had special training sessions given the publicity for 2010 Roth conversions. So far this year the rate of conversions is 4 times that of last year.