IRA Convergence to Roth

Submitted by Robert Carlucci on Thu, 2022-10-06 15:30

If you have a Roth IRA and make periodic conversations to it from one’s IRA, does the 5 year clock starts over with every conversation you make?
Sincerely,
Rob C



Submitted by Alan - IRA critic on Thu, 2022-10-06 16:38

  • You are referring to conversions. The 5 year clock with respect to conversion holding periods to avoid the 10% penalty applies to the conversions done in each year. All conversions done within a single calendar year can be combined, but the year of these conversions must be tracked in order to know which ones are no longer subject to the holding period after the 5 years has passed.
  • The other 5 year holding period is related to when the Roth becomes qualified, along with reaching 59.5. This starts with the first valid contribution of any kind and later contributions do not need to be tracked for purposes of this holding period.

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