Roth 5 Year Rule
I am 70 years old and own a ROTH IRA account (Account 1) that has been open more than 5 years and a second ROTH IRA account (Account 2) that has been open 1 year. Account 1 and 2 are maintained by different Trustees (Custodians). I wish to transfer the entire account balance from Account 1 to Account 2. If I close Account 1 after the transfer, does Account 2 have to be open for 5 years to avoid taxation on any subsequent distribution of earnings or does the 5 year holding period from Account 1 carryover to Account 2, even if Account 1 is closed? Thanks.
Permalink Submitted by Alan - IRA critic on Sun, 2024-07-07 22:01
No problem. Since all your Roth IRA accounts are treated as one combined account for tax purposes, once any account becomes qualified, all accounts including future accounts are also qualified. Therefore, this transfer will not affect the status of any of your Roth accounts. And because they are qualified, you need only report distributions on line 4a of Form 1040. Form 8606 is not needed.