Roth conversion and withdrawal
Have client who converted 16k from her ira to a roth ira in 2021.
She might need 5k due to a situation.
1. Can she take a withdrawal from the roth in 2022 with out paying the 10% penalty (she is 32)?
2. She would not be taxed on the 5k withdrawal since she paid the taxes on the conversion already, correct?
Thank you very much,
Douglas
Permalink Submitted by Alan - IRA critic on Thu, 2022-04-28 17:08
Assuming this conversion is the only contribution she ever made to a Roth IRA and the conversion was taxable, she can withdraw 5k tax free but will owe the 10% recapture tax on the amount withdrawn because the conversion was not held 5 years. There are other penalty waivers that could be used to waive the penalty such as using the funds for higher education costs, paying high medical expenses, disability, etc.
Permalink Submitted by Ken Fitzgerald on Sat, 2022-04-30 03:22
Alan, Can you explain if same scenario was done with 1st Roth IRA conversion done in 2021, and age over 70, in terms of any Roth withdrawal done starting in 2022 up to the original conversion amount in terms of any tax consequences or penalties. I am thinking there are none, but want to run it by an expert.
Permalink Submitted by Alan - IRA critic on Sat, 2022-04-30 15:36
Yes, no penalty because the 5 year holding requirement to avoid the penalty on a conversion withdrawal ends at 59.5. Someone over 59.5 could convert and then withdraw the conversion anytime without tax or penalty, even if the distribution is a non qualified distribution because the person had not met the Roth IRA 5 year holding requirement.