Confirmation of 5 year rule for conversion of rollover IRA to Roth IRA, again
I am over 59 ½ year old and have had a (small) Roth IRA for over 10 years. I also have a traditional IRA, converted from a 401K plan.
In 2021, I want to convert my traditional IRA to a Roth IRA (for personal tax planning reasons). I would pay the conversion tax from separate funds.
My question: can I take everything out next year (2022), including earnings, if any, as a qualified distribution i.e. without tax and penalty. This sounds strange but there may be a situation where this is needed.
I’ve studied the IRA Help website and think the answer is clear:
From your Nov 8, 2021 article “Clarifying some Roth conversion misconceptions”
10. Each Roth conversion will start its own 5-year clock which must be satisfied (or you turn 59 ½) before the converted dollars can be withdrawn penalty-free. Once you have held any Roth IRA for five years and are 59 ½ or older, earnings on converted dollars can come out tax- and penalty-free.
Unfortunately, there are many different answers to this question everywhere else so it would be great if someone could confirm that item 10. Applies to my situation.
JdR
Permalink Submitted by David Mertz on Mon, 2021-12-06 21:57
The conversion clock only applies to those under age 59½, not to you because you are over age 59½.
Because you are over age 59½ and it has been more than 5 years since you first established any Roth IRA, *any* money you now take out of your Roth IRAs is tax and penalty free.
Permalink Submitted by Alan - IRA critic on Mon, 2021-12-06 21:59
Yes, it does apply. Your Roth IRA is qualified and totally tax free including any additional regular or conversion contributions you choose to add to it or to any newly opened Roth IRA.