The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Gin1984 on March 26, 2014, 01:03:26 PM
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If one did a Roth conversion at 60, could the Roth be pulled on in the next tax year?
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The money could be withdrawn as a distribution tax free (because you are older than 59.5), however you will still have to pay the 10% penalty for not waiting 5 years from your conversion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
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The money could be withdrawn as a distribution tax free (because you are older than 59.5), however you will still have to pay the 10% penalty for not waiting 5 years from your conversion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.
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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.
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You could easily have a timing issue and want or need taxable income this year but not next year.
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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?
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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.