Roth Conversion 5-year rule
I’m confused about the Roth Conversion 5-year rule for each conversion. Isn’t the Roth Conversion 5-year rule waived for someone 59 1/2 years or older? There is already a penalty for withdrawing Roth IRA earnings prior to age 59 1/2, but does this mean that the amount of a Roth Conversion at say age 50 in 2020 can be withdrawn without penalty in 2025, but the earnings between 2020 and 2025 would still be an unqualified distribution? Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2025-05-27 09:45
Yes, a 2020 conversion 5 year holding period to avoid the penalty is completed on 1/1/2025 at age 55 and can be withdrawn without tax or penalty. But the earnings in the Roth IRA from that conversion or any other contributions will not become tax or penalty free until age 59.5 assuming that the Roth IRA has been held for at least 5 years upon reaching 59.5.
Of course, earnings in the Roth IRA always come out last before the Roth is qualified.