Roth IRA
Client had Roth and held it over five years. Closed the account it was in two years ago approximately. Now wants to convert an IRA to Roth currently. Will she have to have a new five year waiting period?
Client had Roth and held it over five years. Closed the account it was in two years ago approximately. Now wants to convert an IRA to Roth currently. Will she have to have a new five year waiting period?
Permalink Submitted by Alan Spross on Tue, 2011-05-24 19:19
No. The 5 year holding period for a Roth IRA to be qualified along with reaching 59.5 starts with the first year the client opens a Roth IRA. There is nothing in the code that says that the period must be continuous.
That said, there is also a 5 year holding period for each conversion before the conversion funds can be withdrawn without penalty. This requirement ends at 59.5. If client is under 59.5, there will be a penalty if he withdraws funds from a 2011 conversion prior to 2016.