Roth IRA Earnings and the 5 Year Rule

Submitted by Scott Carbaugh on Sat, 2018-02-03 04:12

A person (over age 59 1/2 )completes an IRA conversion from his/her TIRA some time in 2016. He withdraws all funds (conversion amount + earnings) during late December 2019. What would be the income tax on the earnings portion? Fully taxed as ordinary income or something else?



Submitted by Mark James on Sat, 2018-02-03 15:17

Test 

Submitted by Alan - IRA critic on Sat, 2018-02-03 16:02

If the person had never made a Roth contribution of any type before 2015, then his Roth earnings would not yet be qualified and tax free in 2019. Therefore, he would owe ordinary income tax on the earnings in his Roth IRA, but no penalty since he is over 59.5.

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