Hey, can someone help me out?
I'm managing my mom's finances and I'm a bit fuzzy on roth conversion.
Here's the scoop:
She turns 70 this year. She has about 500k in a traditional rollover IRA. And about 200k in taxable brokerage account.
She's actively trying to sell her farm which might net her another 200k in untaxed earnings.
I've been exploring roth conversion for her. This year and future years, her income will be fairly low (this year 30k, next year maybe 25k). But this year, she gets the standard deduction 24k because my dad (her husband) passed away in early 2020. So, her MAGI will be about 5 or 6k. My thought was this year, convert up to the top of the 12% tax bracket which is $80,249 for 2020.
So, I reckon I move ~75k from her traditional to roth ira this year. Next year will be less, cause she won't be eligible for MFJ status. I reckon she can only do that conversion for the next 2 years prior to turning 72.
But my question is: if I do that, will she be able to access ANY of that rollover money prior to 5 years without paying the 10% penalty? I'm a little fuzzy.
Note: I'd have to open a roth, fund it with the conversion. I'm 95% confident that she won't need that roth money prior to 5 years, but I'm worried that if she had a medical issue or needed assisted living, some of those assets might need to be accessible.