ROTH Withdrawal – 5 Year Rule

Submitted by Vaylu Maymon on Sat, 2020-10-24 20:00

Thank you for the opportunity to submit my questions.

Established ROTH in 1998. I’m 69. First partial ROTH conversion in 2019 and second partial ROTH Conversion in 2020. Both conversions from T-IRA of dividend stocks.

Two Questions.:
Can I withdraw dividends from stocks converted in 2019 and 2020?
Does 5 year rule apply to 2019 and 2020 conversions?

I have part-time work. Income is used to contribute to ROTH and savings account. Purpose of ROTH withdrawals is to pay extra principle on mortgage.

Thank you



Submitted by Alan - IRA critic on Sat, 2020-10-24 22:55

You can take a distribution of any amount you wish since your Roth IRA is qualified and the entire balance is tax free. Any conversions done can be distributed anytime tax and penalty free, even ones you did last week. All past 5 year rules have been met. Not only are distributions tax free, but you do NOT need to complete Form 8606 to report them. The gross amount distributed goes on line 4a of Form 1040 only.

Submitted by Ken Maier on Mon, 2020-10-26 11:49

Hi – I want to convert some IRA $’s to my “old” existing Roth (created in 2012). After the conversion, I want to be able to invest those converted funds when there are significant dips in the market. Presently my “old” Roth acct is managed by Vanguard and VG tells me that if I convert funds to the “old” VG managed Roth acct the converted funds will be automatically invested a few days later per the existing allocation, regardless of the market conditions. Vanguard suggested opening another “new” Roth account (self-managed) so I can pick and choose the buy low strategy. Is this a good or bad idea?, especially considering the 5-year rule?

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