I've slogged through form 8606 instructions and believe I understand the mechanics of how contribution basis and conversion basis protect your Roth IRA distributions from being subject to income tax in the year of distribution. Now I'm moving onto Forms 5329 and 1099 R and the 10% penalty tax on early distributions. My intended scenario is this:
After ER, make Roth IRA conversions from my traditional IRA account, in successive years (say at age 51, 52 and 53 = call them RC1 through RC3)
Wait 5 years on each one (living off of money previously saved in a regular taxable account), then take each amount in a distribution 5 years after it's contribution year. So if RC1 was 2020, RD1 would be 2025, R2: C 2021/D 2026, R3: C 2022/D 2027, etc)
How then do I want my 1099R's to look so that I can signal to the IRS that these distributions are not subject to the penalty tax? And does that then simply mean that line 1 of the 5329 will be zero, or alternatively that lines 1 and 2 will be equal (in both cases line 3, the amount that determines the penalty tax, is also zero)?
Kind of frustrating because the FI literature seems to understand this scenario well enough but does not go into the nitty gritty of the IRS paperwork, and most summaries of Roth IRAs that do, do not handle the particular scenario of the pre-age-59.5 Roth conversion ladder.