Author Topic: Roth IRA Conversion Question  (Read 940 times)

CestMoi

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Roth IRA Conversion Question
« on: December 20, 2017, 12:36:19 PM »
Apologies for the multiple postings; my server wasn't cooperating. Maybe an admin can remove the excess posts?

I converted a traditional IRA to a Roth back in the first year that was allowed. I paid off the resulting tax on the conversion (which was fairly large) over the next three years on my tax returns. The Roth is now worth over 300k.

Does this now mean my Roth IRA is considered a big, over-five-years-ago, pipeline conversion, and I may remove money from it to live on penalty-free? If so, do I need to file any IRS form to do this, or has the IRS been sufficiently notified via my hefty tax payments on the conversion years ago?

If not, what else must I do to begin using the Roth pipeline to live on?

I can supply more specific info if needed. Thanks in advance.
« Last Edit: December 20, 2017, 12:40:42 PM by CestMoi »

terran

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Re: Roth IRA Conversion Question
« Reply #1 on: December 20, 2017, 12:55:59 PM »
Once a conversion has aged 5 years you can withdraw it without tax or penalty, but only up to the amount of the conversion, not the gains that you have had since conversion -- those will incur a penalty unless you wait until 59.5.

seattlecyclone

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Re: Roth IRA Conversion Question
« Reply #2 on: December 20, 2017, 04:05:55 PM »
Yes, the amount you originally converted can now be withdrawn for free.

As for paperwork, you'll have to report the withdrawal on Part III of Form 8606. You'll have to report how this amount compares to your existing basis. The IRS should already know what this is, but you should still keep your records from when you converted in case there's any question.

CestMoi

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Re: Roth IRA Conversion Question
« Reply #3 on: December 30, 2017, 11:43:50 AM »
Thanks for the info! I have more questions on this, so thanks again in advance:

My conversion was done in the late 1990's. I moved several times in that period, so I no longer seem to have the paper record from Fidelity of the exact amount I converted, and Fidelity doesn't keep that information longer than 10 years (something I wasn't aware of until now). I have my tax returns from 2000 and 2001, showing the conversion amount I paid taxes on those years under "Taxable IRA Distributions".

So:

1.) If I can't locate my 1998 and 1999 tax returns, how can I find the exact amount I converted?

2.) Do I need to "prove" the original conversion amount to the IRS, and if so, how? The IRS web site seems to indicate they only supply copies of past year returns up to 7 years prior. Fidelity sent the IRS the original conversion information in the 90s.

Is a call to the IRS in order?