Distributions from Roth IRA
Hi – I am struggling to find consistent information regarding the impact of tax and penalty treatment of Roth IRA distributions. Specifically, places like Fidelity, Vanguard, etc. seem to have a different perspective than this forum when addressing the “5 year rule”. I find the words “every Traditional/Rollover IRA conversion to a Roth IRA has it’s own 5 year rule everywhere.
My spouse and I are both 70 years old.
In 2012, we both opened Roth IRAs and funded (max amounts) them with earned income thru the 2019 tax year.
In 2020, we started doing Rollover IRA to Roth IRA conversions every year (so far we have done 4 of them). More conversions are planned for 2024 and beyond.
My spouse has her account (holding all Roth $$$ –> contributions & conversions) at Fidelity, while I my account (holding all Roth $$$ –> contributions & conversions) is at Vanguard.
My question:
- I believe we can empty these accounts at any time and not incur tax or penalty treatment. Is that correct?
Thanks in advance for your insight.
Permalink Submitted by Alan - IRA critic on Wed, 2024-04-03 23:28
Once you reach age 59.5, all conversion 5 year holding periods end. Both of your Roth IRA accounts are now qualified, so the entire balance is available tax and penalty free. You will get a 1099R, but because your Roths are qualified, you do not need to report distributions on Form 8606. The gross distribution goes on line 4a of Form 1040, and the taxable amount on 4b is 0.