Roth IRA – 5 yr hold period (account close)
Good Afternoon
I’ve received the follwing questions numerous times of late. I am unable to locate a clear answer
Question
What is the effect on a Roth (5-year) clock shold an account holder take a full withdrawal from their only Roth IRA (closing out the account)?
Does the five year clock continue or start over should they estabilsh a new Roth IRA in the future?
Thank you
Permalink Submitted by Alan - IRA critic on Wed, 2013-11-13 21:19
There is no clear answer on whether a full distribution of a Roth IRA stops the clock, and then the clock starts again from 0 if later Roth contributions are made. However, all the Regs refer to the clock as starting with your first Roth IRA contribution and there is no mention of that clock terminating if a full distribution is made. Most likely then the clock will continue to run even during periods when you have no balance in a Roth IRA.