Roth IRA’s via a conversion and the 5 year rule?

Submitted by Zachariah Hammel on Wed, 2015-07-15 16:08

My question is if I have a 56 yr old male who does a Roth Conversion this year and continues to do them for the next 4 years and wants to start taking an income from them what is the rule on that? Is is a 5 year rule and over 59.5 from when the first Roth was converted or setup? Or when the last one was setup or converted?



Submitted by Alan - IRA critic on Wed, 2015-07-15 17:09

  • There are two separate Roth IRA holding periods. 5 years from the year of your first Roth contribution of any type AND reaching 59.5 is when your Roth becomes qualified. The entire balance can then be withdrawn tax and penalty free. The other 5 year holding period only applies to the 10% penalty on withdrawal of conversions done in a specific year and always ends at 59.5 if 59.5 comes before the 5 years is completed..
  • For the case you posted, when this person reaches 59.5, all prior conversions can be distributed tax and penalty free. At this time if his first Roth contribution of any type was done 5 years ago, his Roth is also completely qualified and the entire balance is tax and penalty free.

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