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Question

I put $7000 of my after tax money into an IRA in 2024 and then converted it to a Roth, can I withdraw contributions without tax or penalty? Is 5yr rule only for earnings?

Forum|Forum|1 year ago
January 10, 2025
1 reply
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Employee

First, was this your only money in a traditional IRA, or did you have previous pre-tax (tax deductible amounts) in the traditional IRA. Because if you had pre-tax amounts, you can't do a simple conversion, it gets really complex.

Then, converted amounts in a Roth IRA have a 5 year clock. If you withdraw in less than 5 years, you don't pay income tax, but you do pay a 10% penalty for early withdrawal if you are under age 59-1/2. There is no penalty for withdrawing conversion amounts at any time if you are over age 59-1/2.