Do I have a 10% penalty if i convert a traditional ira to an existing Roth ira if I take money out within 5 years? I am 60.

Forum|Forum|1 year ago
March 28, 2025
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I have read the IRS publications and some other comments, but not quite clear. If i convert an ira to an existing roth ira that I have had for 7 years, am I subject to the 10% penalty if I withdraw proceeds above my original contributions within 5 years of the conversion? I have read a few comments that say if you have one Roth for over 5 years, you have met that 5-year rule already and this is a loop hole and you will not ever have to meet it again for future conversions. Is that correct or wrong?

Best answer by NCPERSON1

@fireman0175 to make it simple, if you meet these two conditions, NOTHING that is distributed from the Roth IRA will ever be subject to any tax:

1) you are over 59.5 years old AND

2) your oldest Roth account has been open for at least 5 calendar years.

doesn't matter if they money is contribution dollars, conversion dollars or earnings. It's all tax free.

dmertz

Employee

Since you are over age 59½, there is no early-distribution penalty on any distribution from your Roth IRA. If it has been more than 5 years since the year for which you made your first Roth IRA contribution, any distribution from your Roth IRAs is a qualified distribution, entirely nontaxable even if the distribution includes earnings.