Author Topic: Roth conversion ladder restrictions according to the WSJ  (Read 2231 times)

aspiringnomad

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Roth conversion ladder restrictions according to the WSJ
« on: April 14, 2015, 09:02:50 AM »
I just read an article in the WSJ about considerations when tapping your Roth IRA. It acknowledged the Roth conversion ladder but said that if you're under 59.5 you may only withdraw conversions penalty free after five years if using the money for a house purchase or other qualifying expense. Is this just flat out inaccurate or are there different interpretations of the same rule? I don't have the link handy at the moment and it's probably behind a paywall anyway, but if it helps I can post the exact language later.

aspiringnomad

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Re: Roth conversion ladder restrictions according to the WSJ
« Reply #1 on: April 14, 2015, 09:08:05 AM »
Ah, I'm guessing that only pertains to conversions from tIRAs and not 401(k)s. Here's the language:

Funds moved into a Roth from a traditional IRA must have been in the account for at least five years, and if the recipient isnít over 59Ĺ, the distribution must be for a qualified first-time home purchase or the result of a death or disability.


boarder42

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Re: Roth conversion ladder restrictions according to the WSJ
« Reply #3 on: April 14, 2015, 09:23:28 AM »
Though notably, any gains on Jeremy's conversion would still be taxable, as even if he has met the 5-year requirement for conversions and contributions, he has not met the 59 1/2, deceased, or disabled requirement to receive tax-free qualified distributions from his Roth IRA.)

this part doesnt make sense since you cant withdraw gains from a Roth without penalty prior to 59.5 only principal.

aspiringnomad

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Re: Roth conversion ladder restrictions according to the WSJ
« Reply #4 on: April 14, 2015, 09:31:53 AM »
Thanks for the helpful link. The Roth ladder will probably be a key component of my RE strategy so I want to make sure I understand it fully and prepare appropriately. Fortunately (or unfortunately), I have a few years to figure it out.

9ft5wt

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Re: Roth conversion ladder restrictions according to the WSJ
« Reply #5 on: April 14, 2015, 10:51:32 AM »
Interesting. I find the Conversion Ladder strategy to be full of uncertainty. Is anyone on here actually, currently, withdrawing funds post 5-year marination?

boarder42

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Re: Roth conversion ladder restrictions according to the WSJ
« Reply #6 on: April 14, 2015, 11:38:32 AM »
Interesting. I find the Conversion Ladder strategy to be full of uncertainty. Is anyone on here actually, currently, withdrawing funds post 5-year marination?

in the event its not comfy for you i'm sure you could use the Sepp 72t.  But i'd be interested to see how people using it have done.