Roth Conversion
I have an 82-year-old client wishing to do a Roth conversion of his $55,000 IRA. However, he may very likely go into the nursing home within a couple years, and he is worried about Medicaid spend down in order to qualify for Medicaid. If he must spend down his Roth IRA account in order to qualify for Medicaid and it is before the 5-year-period for qualified distribution, will he be subject to the 10% withdrawal penalty?
Permalink Submitted by Alan - IRA critic on Mon, 2020-07-20 22:47
No, there is never a penalty after age 59.5, and therefore no conversion 5 year holding requirement. However, if this is client’s first Roth IRA, any earnings distributed after the 55,000 has been distributed will be taxable if done prior to completion of 5 years.