Roth Conversion 5 Year Rule?

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newcollegeman
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Roth Conversion 5 Year Rule?

Post by newcollegeman »

I am confused on Roth Conversions.

I did a small Roth Conversion in 2020. The money went from my pretax Traditional IRA into my Roth IRA, to which I had been making annual contributions for over a decade.

Is there some rule which requires me not to touch my Roth IRA money until I wait 5 years for the Roth Conversion money to qualify for withdrawal?

I looked in our Wiki article & see some reference to a 5 year qualification, but I frankly just don’t grasp it.

Appreciate any light,

newcollegeman
McDougal
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Re: Roth Conversion 5 Year Rule?

Post by McDougal »

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newcollegeman
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Re: Roth Conversion 5 Year Rule?

Post by newcollegeman »

Just what I needed!

Many thanks,

newcollegeman
McDougal
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Re: Roth Conversion 5 Year Rule?

Post by McDougal »

newcollegeman wrote: Sat Sep 18, 2021 1:21 pm Just what I needed!

Many thanks,

newcollegeman
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retiredjg
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Re: Roth Conversion 5 Year Rule?

Post by retiredjg »

newcollegeman wrote: Sat Sep 18, 2021 1:21 pm Just what I needed!

Many thanks,

newcollegeman
See if this is what you think the article said.

Your contributions directly to Roth IRA (from the past) are available anytime with no penalty or further tax.

Your recent Roth conversion is not available without penalty until after 12/31/24.

The earnings from either of those sources are not available until you are at least 59.5. The other requirement (5 years since first contribution) has already been met.
ThankYouJack
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Re: Roth Conversion 5 Year Rule?

Post by ThankYouJack »

retiredjg wrote: Sat Sep 18, 2021 2:20 pm
newcollegeman wrote: Sat Sep 18, 2021 1:21 pm Just what I needed!

Many thanks,

newcollegeman
See if this is what you think the article said.

Your contributions directly to Roth IRA (from the past) are available anytime with no penalty or further tax.

Your recent Roth conversion is not available without penalty until after 12/31/24.

The earnings from either of those sources are not available until you are at least 59.5. The other requirement (5 years since first contribution) has already been met.
I didn't read the article but would say the bolded part is false. You can withdrawal the money at any point, you just may owe a penalty on it, right?
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Eagle33
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Re: Roth Conversion 5 Year Rule?

Post by Eagle33 »

Best summary table of treatment of Roth IRA distributions I know of is in our wiki - Roth IRA withdrawals. Just need to add statement that order of withdrawals start at the top line and only moves to the next line when current line's type of withdrawal is depleted.

EDIT: fixed link
Last edited by Eagle33 on Sun Sep 19, 2021 11:48 am, edited 1 time in total.
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retiredjg
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Re: Roth Conversion 5 Year Rule?

Post by retiredjg »

ThankYouJack wrote: Sat Sep 18, 2021 4:04 pm
retiredjg wrote: Sat Sep 18, 2021 2:20 pm
newcollegeman wrote: Sat Sep 18, 2021 1:21 pm Just what I needed!

Many thanks,

newcollegeman
See if this is what you think the article said.

Your contributions directly to Roth IRA (from the past) are available anytime with no penalty or further tax.

Your recent Roth conversion is not available without penalty until after 12/31/24.

The earnings from either of those sources are not available until you are at least 59.5. The other requirement (5 years since first contribution) has already been met.
I didn't read the article but would say the bolded part is false. You can withdrawal the money at any point, you just may owe a penalty on it, right?
Right. I should have been more specific. I should have said "The earnings from either of those sources are not available without tax and penalty until you are at least 59.5."
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oldcomputerguy
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Re: Roth Conversion 5 Year Rule?

Post by oldcomputerguy »

Eagle33, it looks like your link does not lead where you intended. Is this perhaps the table you were referring to?

Treatment of distributions summarised in table form
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newcollegeman
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Re: Roth Conversion 5 Year Rule?

Post by newcollegeman »

Clear summary & great chart!

Appreciatively,

newcollegeman
Arby
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Re: Roth Conversion 5 Year Rule?

Post by Arby »

oldcomputerguy wrote: Sun Sep 19, 2021 8:02 am Eagle33, it looks like your link does not lead where you intended. Is this perhaps the table you were referring to?

Treatment of distributions summarised in table form
Thanks!

Just for complete clarity, I am 67 and my first Roth was opened 10+ years ago. Is there any scenario where I could be liable for taxes or penalties if I withdraw money, even all of it?

From the chart it appears not but just want to make sure I'm not missing something.
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Re: Roth Conversion 5 Year Rule?

Post by terran »

Arby wrote: Tue Sep 21, 2021 12:10 pm
oldcomputerguy wrote: Sun Sep 19, 2021 8:02 am Eagle33, it looks like your link does not lead where you intended. Is this perhaps the table you were referring to?

Treatment of distributions summarised in table form
Thanks!

Just for complete clarity, I am 67 and my first Roth was opened 10+ years ago. Is there any scenario where I could be liable for taxes or penalties if I withdraw money, even all of it?

From the chart it appears not but just want to make sure I'm not missing something.
No, since you're over 59.5 with a Roth open at least 5 years there won't be any tax or penalty on any withdrawal from a Roth account for you.
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