Author Topic: Traditional IRA to Roth  (Read 2178 times)

Gin1984

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Traditional IRA to Roth
« on: March 26, 2014, 01:03:26 PM »
If one did a Roth conversion at 60, could the Roth be pulled on in the next tax year?

nawhite

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Re: Traditional IRA to Roth
« Reply #1 on: March 26, 2014, 02:15:46 PM »
The money could be withdrawn as a distribution tax free (because you are older than 59.5), however you will still have to pay the 10% penalty for not waiting 5 years from your conversion date.

http://www.irs.gov/publications/p590/ch02.html#en_US_2013_publink1000231064

Gin1984

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Re: Traditional IRA to Roth
« Reply #2 on: March 26, 2014, 02:42:50 PM »
The money could be withdrawn as a distribution tax free (because you are older than 59.5), however you will still have to pay the 10% penalty for not waiting 5 years from your conversion date.

http://www.irs.gov/publications/p590/ch02.html#en_US_2013_publink1000231064
That link says you don't have to pay the penalty if you are over 59.5.

garrettld

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Re: Traditional IRA to Roth
« Reply #3 on: March 26, 2014, 03:18:11 PM »
nawhite is incorrect. You will never have to pay a 10% penalty on any distribution at all once you're 59.5. The 5-year rollover period does not apply if you're over 59.5, nor does any other restriction.

With that being said, unless you have some other reason for wanting your money in a Roth, it would be easier and simpler and cost the same in taxes to just take the money straight out of your Traditional IRA and skip the Roth step.

TreeTired

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Re: Traditional IRA to Roth
« Reply #4 on: March 26, 2014, 04:10:24 PM »
You could easily have a timing issue and want or need taxable income this year but not next year.   

nawhite

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Re: Traditional IRA to Roth
« Reply #5 on: March 26, 2014, 04:51:23 PM »
On the link, I was going with the flow chart which asks "has the account been open for more than 5 years" before it asks "are you over 59.5." I took that to mean the 5 year rule took precedence and that the "exception" listed only applied when the account had been open for 5 years already.

Does someone else have a source on this?

FIPurpose

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Re: Traditional IRA to Roth
« Reply #6 on: March 26, 2014, 04:59:38 PM »
I think the better question as others have pointed out is why would you want to do this over the age of 591/2?

The only reason I can come up with is if your spending for a given year does not equal your tax deductions.