Roth IRA 5-year rule

Inherited Roth IRAs and Roth Conversions: Today’s Slott Report Mailbag

Question: Am I correct to assume if I leave my Roth IRA to my 2 adult children, they will have to take all the money out by the end of year 10 and they will have NO taxes to pay on it because it is a Roth? They can take some out each year with NO taxes due, but have the option to leave it all in the account for 10 years, if they desire. Thank you! Louise

The Roth 5-Year Clock: Not Always the Full Five Years

We all know that if you want tax-free earnings in your Roth IRA, you must wait five-years. The Roth IRA owner has to have some “skin in the game,” so to speak, before the IRS grants the tax break. One must demonstrate a commitment to retirement savings in order to receive the tax-free carrot. Makes sense. But five years is so long! That’s more time than it takes to complete high school! Over the next five years there will be a Winter Olympics in Beijing and a Summer Olympics is Paris and we will be preparing for another Winter Olympics in Italy. So, if you want tax-free earnings in your Roth IRA by the time competitors are slaloming down the Dolomites, you better make that contribution or complete that Roth IRA conversion ASAP.


Question: I rolled over an IRA in March 2021 from an TD Ameritrade institutional account to a TD Ameritrade retail account. I currently would like to do a 60-day short-term rollover. Would this not be allowed because of the one rollover per 12 month period or is a 60-day short-term rollover treated differently? Thank you for your time.

You Are Never Too Old to Convert

There is a lot of information out there about how converting to a Roth IRA is a great move for younger people. This is no surprise. A younger person who converts may pay taxes on a smaller IRA balance and have years to accrue tax-free earnings in their Roth IRA. But what about older people? Older individuals should not overlook the potential tax benefits of converting later in life.

Can I Still Contribute to My 401(k) as a Part-Time Employee?

This week's Slott Report Mailbag discusses complex retirement planning topics with a charitable uncle interested in leaving his Roth IRAs to his grandnephews and nieces and an employee moving to part-time work who is still interested in contributing to his 401(k).

3 Five-Year Rules for Roth IRAs You Need to Know

Do you have a Roth IRA or are you thinking about starting one? You may have heard that a “five-year” rule is important for these accounts. Well, that’s just the beginning of the story. There are actually three different five-year rules for Roth IRAs. You need to understand each of them to maximize the benefits of your Roth IRA.

What Will Happen To the Stretch IRA?

This week's Slott Report Mailbag answers questions on the tax "sweet spot" in retirement, the tax and penalty impact on a non-spouse beneficiary's inherited Roth IRA distributions and the future of the stretch IRA.

Slott Report Mailbag: How Do These Roth IRA 5-Year Rules Work?

The Slott Report Mailbag is full of inquiries on one of our most discussed topics, the Roth IRA 5-year rules, as well as a question that came from our Wednesday article on where you report your 2013 Roth IRA contributions on your tax return (hint: nowhere!). Click for this week's Q&A with our IRA Technical Expert.

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