Question - I had a previous Roth IRA with a small balance, which I closed and distributed. I've opened a new one. Does the time I held the prior count toward the 5 years now that I have a new one, or does the clock start over with the new one? Thks!
Yay for clarifying the roth conversion 5 year rule, especially if over 59 1/2 and the ROTH IRA has been open for 5 years. No additional 5 year waiting period on any roth coversions
@@88888gerald unless you are 59½ years old or older. Once you reach 59½ years old, the only clock is the 5-year clock that begins when your first Roth IRA is opened.
Or as early as possible, eg as a teenager if possible. Can put 5 bucks in it - starts the clock! Then 5 yrs later, that 5 yr clock (the "forever clock") requirement is satisfied.
No, the Roth IRA forever clock starts when you open your first Roth IRA. Even if you have had a Roth 401k for longer, when you roll it into a Roth IRA the clock of the IRA is the clock. The Roth 401k has its own clock if you never rolled over to a Roth IRA but as soon as you do the IRA is the determining factor.
I think I had a Roth IRA many years ago and not. Sure if i kept it for 5 years or not before cashing it in when I needed money for divorce.doe it have to be open for 5 years and how can I find out of it was a Roth or not?
Does the IRS keep the accounting for Roth contributions and conversions? Asking because Vanguard does not have any records over 7 years old and I was considering withdrawing my early contributions from back in the day, back when the limit was only $2000.
Call Vanguard, I did years ago when I had the same question and they walked me through all of my contributions by calendar year from the very first year. You may not be able to access old history online, but they have it....
best explained that 5 yrs rule does not apply for converted Roth if you are 59 1/2 years old (but it still apply to the earning part) regardless how long this Roth account you have had opened.
Nope. If you are over 59 and 1/2 and have had any Roth IRA open for at least five years, then all distributions are qualified and tax free. That’s straight from the IRS website.
Doing a 401 k Convertions, Roth IRA is over 5 years old, I'm 59 1/2 old and want to do a convertion each year. Do I have to wait 5 years for each convertion to access the earning if i'm over 59 1/2? Or am I clear from taxes and penalties.
Newer Subscriber here. I have watched several of your videos. I appreciate the content and delivery. I have a question for you. I have a Roth IRA that is over 12 years old at a broker so first 5 year clock is met, I turned 60 a few months ago so second 5 year clock met. I am planning on moving the Roth IRA to a different broker in kind due to expense fees. Does this in any way reset or start another 5 year clock. If so would it be better to leave a minimal amount in the original Roth IRA. Thanks for your help and keep the videos coming. Steve
Let's say that I turn 59 1/2 and My Roth IRA been opened for five years. I than rollover my Roth 401k to my Roth IRA. Would earnings from the Roth 401k be available immediately without any tax implications? Thanks
Good question, The former Roth 401(k) dollars would follow the 5-year clock applicable to the Roth IRA. So, yes, even if the Roth 401(k) was only open for, say, 2 years, those earnings would get to “fast forward” to catch up to the 5-year clock on the Roth IRA after the rollover.
Contributions are the money you put in the account each year. There is a limit, around $7,000 , they adjust it from time to time. You can always take out your contributions at any time because you already paid tax on that money. Conversions are different. If you have a traditional IRA or a 401(k) you can move money from them to the Roth IRA. You have to pay ordinary income tax on this converted amount. There is no dollar limit on conversions. Earnings is just what it sounds like. If you put $7,000 in the Roth and invest it in a fund or stock and it increases in value to $10,000 then the $3,000 difference is the earnings. Hope this helps!
I would like clarity/ confirmation… because the chart does not address my scenario. (First- No Roth Contributions.) Over the 59 1/2 years old, a Conversion is done. As I am over the 59 1/2 years old, I can take out, without penalty (5- year rule does not apply?) But, any Earnings from the Contributions need to stay put, for 5- years… not to have the penalty. Is this statement correct?
As long as you have had any Roth IRA for 5 years AND you are over 59 ½, all Roth IRA dollars are immediately available tax and penalty free. This includes earnings on any converted dollars, even if the conversion was done recently, and on all future conversions. There are NO 5-year clocks to ever worry about. Everything is and will forever be tax-free.
@@FinancialFastLane Are you sure this is correct? So, I CAN take out my converted amount if I need the money within the 5 years, not the profits without a penalty at age 65? This is very important to me to get the correct answer. Thank you!
@evanotgaboring11 Hope you got your answer by now but it's always been my understanding that one can remove up to the amount of $ they put directly into a Roth IRA (aka "Contributions") without incurring the 10% penalty and without tax. That's one of the even less appreciated perks of a Roth IRA- it's like an emergency fund that is shielded against taxes. (A typically recommended bank account as a store for one's emergency fund is not tax shielded - so any interest earned on $ in it is taxed when you do your taxes each April. Probably small amount though over many years, and especially recently when interest rates were 4+%, it could add up. And better still, you could invest your emergency fund if it's in a Roth IRA. Obviously you need to be judicious in selecting investments if that's where you're parking your emergency fund.
I am 58, I have never put into a roth ira, My eyes were recently just opened to all this- is it too late for me to do it now? Can I start with a thousand dollars ?where Would that somewhat get me, and in how long? Estimated of course -or am I too late? Did I miss the boat?
It’s not too late! You can do a lot with $1k, but try to max out the full 8k this year if you can. Remember, when you open a Roth and transfer money into it, you still need to INVEST those dollars. Consider something with growth like Fidelity FGKFX, FSPSX is international, FXAIX is S&P 500.
Definitely better late than never - the most urgent thing is to get that clock rolling. Even if you have only $5 free, get a Roth OPENED before the end of the year. (You need to have earned the $5 this year - ie been paid for work (as opposed to received the money from dividends or interest, or from your wallet or from your bank account). If no earned income this year, then doing a Roth Conversion will work fine too - ie convert money (or stocks, etc in-kind) from a Traditional IRA or a 401k or a 403b (or potentially other similarly eligible retirement plans) to a Roth IRA. You can just check with the financial company where those assets are as to how to accomplish the Roth Conversion. Might be possible online as long as you're already set up online, ir potentially by phone, or even in-person potentially at your credit union or bank - but not guaranteed and may need to set up an appt so start now just in case it takes a while, so you get this accomplished and the contribution credited before the end of the year. Ideally, do both - set up a Roth IRA with a Contribution & set up a Roth IRA via doing a Roth Conversion. Even if not substantially funded right away - which is no problem - just set up a Roth IRA - should take 10 min to a few days or a week or two depending on where your money/assets are and how user-friendly your financial/retirement companies are.
If I opened my first a Roth IRA account with a broker and then some time later moved it all to a second broker, do I need to maintain records from the first broker to prove when the Five Year Rule clock started ticking?
Yes, you just need the date the Roth IRA received its first dollar. If you had a Roth IRA with zero dollars it wouldn't count. As long as you have at least one dollar in there the clock starts.
Does a roth 401k start the 5 year clock for an IRA when you want to role it once you stop working or do you need an IRA for 5 years independant of the 401k?
Can you confirm the information in this video only applies to roth IRAs. My understanding is for a backdoor roth after tax 401K (after tax contribution with automatic Roth conversion) distributions will part contributions and part earnings. Distributions from a Roth 401(k) account will always be part contributions and part earnings determined pro-rata. For example, if your Roth 401(k) account is 70% contributions and 30% earnings, your distribution will be considered 70% contributions (always tax free) and 30% earnings (subject to tax unless a qualified distribution).
My understanding. Please correct if I am wrong. Above 59 1/2 => No penalty (even if held for < 5 years). Above 5 year holding of IRA yearly fund => No penalty (even if you are
When I inherited a Roth IRA I had to transfer the funds into a custodian beneficiary Roth IRA account, but its not clear if the beneficiary's account or the original owner's account needs to have existed for 5 years for earnings to be tax free. Since the original Roth was only with the current brokerage for 3 years before my mother passed they issued a T code, but I know for certain the original Roth was over 5 years old with other brokerages included. Does the original owner or the beneficiary need to have held ownership of the Roth IRA funds for over 5 years for the earnings to be tax free? If the brokerage used a 1099R T code instead of Q are the earnings still tax free?
How long is 5 years in Roth years ? Is it 5x365 plus the leap year ? or is it 3 full calendar years plus 2 days minimum ? Does year 1 of a 5 year Roth count as a full calendar if a Roth account is open and funded on December 31st ? Does Year 5 of a Roth fulfill the requirements on January 2 in a Roth calendar year ? I hope we are all completely confused now.
It's really more like a 4 years and 1 day to 5 year rule. ie, I've seen it written in multiple other places that a contribution any day of "Year 1" is regarded as having been made on January 1st of that year. So making a contribution on December 31st enables you to count that year as your 1st year of the 5 years. Then the clock ticks for 4 more calendar years and on January 1 of the 6th year, you've officially passed the 5 year forever clock requirement and the benefits of that are yours. So, make a contribution (of earned income) to your first ever Roth in December 2024---> 2024 is Year 1. 2025 is Year 2 2026 is Year 3 2027 is Year 4 2028 is Year 5 January 1, 2029 - as 5 years have been completed, the 5 year requirement has been met. I think the same applies to Roth conversions but it gets a bit more confusing... (Caveat, be careful to make sure your bank or credit union or broker credits it for THIS calendar year - some are better than others with their bureaucracies. So best to make the contribution as early as possible and not wait til the last minute at year's end or you might miss this year.)
Does the 5 year rule apply to 401k money from my former employer, that was rolled into a Roth IRA? I have had the 401k for 16 years and rolled it into my Roth IRA which I have had for 25 years?
Question. What if I moved a 10 year old Roth IRA to another financial institution and also changed mutual Funds in it? Does the 5 year rule start from zero then? Thank you.
Iv'e heard that if one is doing a ladder conversion from a traditional IRA to a new Roth IRA (i.e., 40K per year for 10 years), each conversion resets the clock (the 5 years starts over with each conversion). Another source said each conversion has it's own individual 5 year clock). This is for folks over 59.5. I didn't hear you mention either of these situations. Which is true?
If you are over 59 and 1/2, the only five year rule that applies is to owning the Roth IRA. It’s best to open a Roth maybe at a local bank to start the clock when you are younger. If you are over 59 and 1/2 and you have had any Roth IRA open for at least five years then all distributions are qualified and tax free. That’s straight from the IRS website.
what you fail to mention is the POP (period of performance) On The Profit. . Buy $1000 stocks at age 62. It doubles to $2000 and I sell it then at age 65. Is the five year clock starting at 62 on profits? or more likely 65 when you sold and profited. So tax free at 70. What is the answer please?
You are refering to taxation on the "gains" and the answer depends on if you have had any IRA for more than 5 years and you are over ag 59 1/2. If yes and yes then the gains are available tax free.
every roth conversion starts its own five year wait....here is from fidelity...Important to know: The 5-year rule is counted separately for each conversion. The same rules apply to so-called backdoor Roth IRAs.
Yes Roth is much better. I did a traditional 457b and have to pay tax when i take it out. Took out 11,000 the other day and. with federal and Cali tax I am only getting 8500. Nobody really told me about the Roth in my 32 year law enforcement career. Its a great deal. I could convert it now but the cost would just be to much and my kids inherit the shares tax free so no point in it at this advanced age!
Anyone with a Roth IRA can withdraw contributions at any age and at anytime. That is not the case with gains, you need to wait until after eight 59 1/2. Also, if you do a Roth conversion, you can access the converted dollars after five years.
ROTH IRAs offer the advantage of tax-free growth, allowing you to keep more of your hard-earned money. I’m considering investing over $300k but not entirely sure where to start.
There are benefits to holding fixed-income assets in tax-deferred retirement funds rather than taxable accounts. If you're unsure about navigating the market, it's wise to seek guidance from a financial advisor.
I agree-having an advisor manage my investments has been invaluable since my work schedule doesn't allow time for in-depth analysis. Thankfully, my portfolio has grown fivefold in just four years, reaching nearly $1 million today.
I'm 65. I have had an IRA and a Roth IRA for over 20 years. I now want to convert $20k from IRA to the ROTH at age 65 & for the next 5+ years. You are saying: At any time, I can take any/all of my Roth conversions and earnings before "5 years" with no IRS Income taxes. • NO 5-year clock on Roth Conversion if Roth is over 5+ years old, and Conversion started at 65 • The 5-year clock does NOT start over for each conversion, age 65, 66, 67 ..... • The 5-year clock does not apply to withdrawls on earnings, and no TAXES In any year, after 5 years from the FIRST opening Roth in 2002, (over 59 1/2) At any time I can withdraw any/all conversions, AND earnings, no IRS taxes on earnings. Is This Correct? _________________ Thanks!
That's how i interpreted his information. Open ANY Roth at 35. Start Conversions at 60. (Pay tax on conversion) ALL earnings and principle withdrawal are available immediately and tax free with no penalties.
Since you are over age 59 ½ AND has had a Roth IRA for 5 years, this you have IMMEDIATE access to all Roth IRA dollars, including any converted dollars and earnings. You will NEVER have to worry about a Roth IRA 5-year clock ever again. That includes any future conversions. ALL Roth IRA dollars, including earnings, are immediately and forever available both tax- and penalty-free.
Heard various explanations on this subject on utube. I believe yours are correct. Thanks for the simple and clear explanations. 👍
This was very beneficial. Thank you for the clear and concise explanation.
Thank you for the explanation! I opened my first Roth IRA earlier this year with $200. I am 53 and wanted to get that click ticking.
Best explanation I’ve heard.
Question - I had a previous Roth IRA with a small balance, which I closed and distributed. I've opened a new one. Does the time I held the prior count toward the 5 years now that I have a new one, or does the clock start over with the new one? Thks!
Thanks for your content.
I'm 66 and still put money in. Its a great deal
Best explanation! Bravo! Helped me to understand clearly.
Yay for clarifying the roth conversion 5 year rule, especially if over 59 1/2 and the ROTH IRA has been open for 5 years. No additional 5 year waiting period on any roth coversions
every roth conversion starts its own five year clock.
@@88888gerald unless you are 59½ years old or older. Once you reach 59½ years old, the only clock is the 5-year clock that begins when your first Roth IRA is opened.
truthfully I think he explained it wrong....every conversion has its own five year clock....before that you will owe tax on the withdrawal
@@88888gerald the Roth IRA 5-year rule for conversions no longer applies once the account holder turns 59½ years old.
@@88888gerald the Roth 5-year rule on conversions no longer applies once the account holder turns 59½ years old.
Great video! No matter how small start a Roth IRA 5 years prior to 59-1/2
Or as early as possible, eg as a teenager if possible. Can put 5 bucks in it - starts the clock! Then 5 yrs later, that 5 yr clock (the "forever clock") requirement is satisfied.
Does a Roth 401k start the forever clock?
@FinancialFastLane any help here?
No, the Roth IRA forever clock starts when you open your first Roth IRA. Even if you have had a Roth 401k for longer, when you roll it into a Roth IRA the clock of the IRA is the clock. The Roth 401k has its own clock if you never rolled over to a Roth IRA but as soon as you do the IRA is the determining factor.
thank you, very clear explanation
I think I had a Roth IRA many years ago and not. Sure if i kept it for 5 years or not before cashing it in when I needed money for divorce.doe it have to be open for 5 years and how can I find out of it was a Roth or not?
Does the IRS keep the accounting for Roth contributions and conversions? Asking because Vanguard does not have any records over 7 years old and I was considering withdrawing my early contributions from back in the day, back when the limit was only $2000.
Call Vanguard, I did years ago when I had the same question and they walked me through all of my contributions by calendar year from the very first year. You may not be able to access old history online, but they have it....
Thank you for your time and sharing your hard earnd knowledge with us!
best explained that 5 yrs rule does not apply for converted Roth if you are 59 1/2 years old (but it still apply to the earning part) regardless how long this Roth account you have had opened.
Nope. If you are over 59 and 1/2 and have had any Roth IRA open for at least five years, then all distributions are qualified and tax free. That’s straight from the IRS website.
Thank you Fast Lane very informative and I’m glad I watch your video tutorial. Thank you somuch
So if I first contribute to a roth on Dec 31, the clock will have started on Jan 1 of that year?
Yes, that’s right
Doing a 401 k Convertions, Roth IRA is over 5 years old, I'm 59 1/2 old and want to do a convertion each year. Do I have to wait 5 years for each convertion to access the earning if i'm over 59 1/2? Or am I clear from taxes and penalties.
Newer Subscriber here. I have watched several of your videos. I appreciate the content and delivery. I have a question for you. I have a Roth IRA that is over 12 years old at a broker so first 5 year clock is met, I turned 60 a few months ago so second 5 year clock met. I am planning on moving the Roth IRA to a different broker in kind due to expense fees. Does this in any way reset or start another 5 year clock. If so would it be better to leave a minimal amount in the original Roth IRA. Thanks for your help and keep the videos coming. Steve
Moving or rolling over your Roth IRA will not reset anything. A direct rollover has no impact. Thanks for the question!
Let's say that I turn 59 1/2 and My Roth IRA been opened for five years. I than rollover my Roth 401k to my Roth IRA. Would earnings from the Roth 401k be available immediately without any tax implications? Thanks
Good question, The former Roth 401(k) dollars would follow the 5-year clock applicable to the Roth IRA. So, yes, even if the Roth 401(k) was only open for, say, 2 years, those earnings would get to “fast forward” to catch up to the 5-year clock on the Roth IRA after the rollover.
What's a conversion?
@@ZoSoPage1977 Converting tax-deferred to tax free.
Great info. Thanks for sharing.
What are contributions, conversions and earnings? Sorry, I am just starting out and need to know what these terms mean?
Contributions are the money you put in the account each year. There is a limit, around $7,000 , they adjust it from time to time. You can always take out your contributions at any time because you already paid tax on that money. Conversions are different. If you have a traditional IRA or a 401(k) you can move money from them to the Roth IRA. You have to pay ordinary income tax on this converted amount. There is no dollar limit on conversions. Earnings is just what it sounds like. If you put $7,000 in the Roth and invest it in a fund or stock and it increases in value to $10,000 then the $3,000 difference is the earnings. Hope this helps!
I would like clarity/ confirmation… because the chart does not address my scenario. (First- No Roth Contributions.)
Over the 59 1/2 years old, a Conversion is done. As I am over the 59 1/2 years old, I can take out, without penalty (5- year rule does not apply?)
But, any Earnings from the Contributions need to stay put, for 5- years… not to have the penalty. Is this statement correct?
As long as you have had any Roth IRA for 5 years AND you are over 59 ½, all Roth IRA dollars are immediately available tax and penalty free. This includes earnings on any converted dollars, even if the conversion was done recently, and on all future conversions. There are NO 5-year clocks to ever worry about. Everything is and will forever be tax-free.
@@FinancialFastLane Are you sure this is correct?
So, I CAN take out my converted amount if I need the money within the 5 years, not the profits without a penalty at age 65? This is very important to me to get the correct answer. Thank you!
@evanotgaboring11 Hope you got your answer by now but it's always been my understanding that one can remove up to the amount of $ they put directly into a Roth IRA (aka "Contributions") without incurring the 10% penalty and without tax.
That's one of the even less appreciated perks of a Roth IRA- it's like an emergency fund that is shielded against taxes. (A typically recommended bank account as a store for one's emergency fund is not tax shielded - so any interest earned on $ in it is taxed when you do your taxes each April.
Probably small amount though over many years, and especially recently when interest rates were 4+%, it could add up. And better still, you could invest your emergency fund if it's in a Roth IRA. Obviously you need to be judicious in selecting investments if that's where you're parking your emergency fund.
@@FinancialFastLane This is Great NEWS! I hope you are right about this! Conversion from a 401k is the same?
I am 58, I have never put into a roth ira, My eyes were recently just opened to all this- is it too late for me to do it now? Can I start with a thousand dollars ?where Would that somewhat get me, and in how long?
Estimated of course -or am I too late? Did I miss the boat?
Just start it ASAP! It's never too late if you're still working and earning money. I maxed mine out as I wound down my career to part-time.
It’s not too late! You can do a lot with $1k, but try to max out the full 8k this year if you can. Remember, when you open a Roth and transfer money into it, you still need to INVEST those dollars. Consider something with growth like Fidelity FGKFX, FSPSX is international, FXAIX is S&P 500.
Definitely better late than never - the most urgent thing is to get that clock rolling. Even if you have only $5 free, get a Roth OPENED before the end of the year. (You need to have earned the $5 this year - ie been paid for work (as opposed to received the money from dividends or interest, or from your wallet or from your bank account).
If no earned income this year, then doing a Roth Conversion will work fine too - ie convert money (or stocks, etc in-kind) from a Traditional IRA or a 401k or a 403b (or potentially other similarly eligible retirement plans) to a Roth IRA. You can just check with the financial company where those assets are as to how to accomplish the Roth Conversion. Might be possible online as long as you're already set up online, ir potentially by phone, or even in-person potentially at your credit union or bank - but not guaranteed and may need to set up an appt so start now just in case it takes a while, so you get this accomplished and the contribution credited before the end of the year.
Ideally, do both - set up a Roth IRA with a Contribution & set up a Roth IRA via doing a Roth Conversion.
Even if not substantially funded right away - which is no problem - just set up a Roth IRA - should take 10 min to a few days or a week or two depending on where your money/assets are and how user-friendly your financial/retirement companies are.
If I opened my first a Roth IRA account with a broker and then some time later moved it all to a second broker, do I need to maintain records from the first broker to prove when the Five Year Rule clock started ticking?
Yes, you just need the date the Roth IRA received its first dollar. If you had a Roth IRA with zero dollars it wouldn't count. As long as you have at least one dollar in there the clock starts.
Does a roth 401k start the 5 year clock for an IRA when you want to role it once you stop working or do you need an IRA for 5 years independant of the 401k?
You need a Roth IRA independent of a 401k
Well done, thank you.
Can you confirm the information in this video only applies to roth IRAs.
My understanding is for a backdoor roth after tax 401K (after tax contribution with automatic Roth conversion) distributions will part contributions and part earnings.
Distributions from a Roth 401(k) account will always be part contributions and part earnings determined pro-rata. For example, if your Roth 401(k) account is 70% contributions and 30% earnings, your distribution will be considered 70% contributions (always tax free) and 30% earnings (subject to tax unless a qualified distribution).
This video will answer your question regarding the pro-rata rule. ua-cam.com/video/99qFiue6Sak/v-deo.html
This was excellent
My understanding. Please correct if I am wrong.
Above 59 1/2 => No penalty (even if held for < 5 years).
Above 5 year holding of IRA yearly fund => No penalty (even if you are
Very good!
When I inherited a Roth IRA I had to transfer the funds into a custodian beneficiary Roth IRA account, but its not clear if the beneficiary's account or the original owner's account needs to have existed for 5 years for earnings to be tax free. Since the original Roth was only with the current brokerage for 3 years before my mother passed they issued a T code, but I know for certain the original Roth was over 5 years old with other brokerages included.
Does the original owner or the beneficiary need to have held ownership of the Roth IRA funds for over 5 years for the earnings to be tax free?
If the brokerage used a 1099R T code instead of Q are the earnings still tax free?
Thank you very much.
How long is 5 years in Roth years ? Is it 5x365 plus the leap year ? or is it 3 full calendar years plus 2 days minimum ? Does year 1 of a 5 year Roth count as a full calendar if a Roth account is open and funded on December 31st ? Does Year 5 of a Roth fulfill the requirements on January 2 in a Roth calendar year ? I hope we are all completely confused now.
It's really more like a 4 years and 1 day to 5 year rule. ie, I've seen it written in multiple other places that a contribution any day of "Year 1" is regarded as having been made on January 1st of that year. So making a contribution on December 31st enables you to count that year as your 1st year of the 5 years. Then the clock ticks for 4 more calendar years and on January 1 of the 6th year, you've officially passed the 5 year forever clock requirement and the benefits of that are yours.
So, make a contribution (of earned income) to your first ever Roth in December 2024--->
2024 is Year 1.
2025 is Year 2
2026 is Year 3
2027 is Year 4
2028 is Year 5
January 1, 2029 - as 5 years have been completed, the 5 year requirement has been met.
I think the same applies to Roth conversions but it gets a bit more confusing...
(Caveat, be careful to make sure your bank or credit union or broker credits it for THIS calendar year - some are better than others with their bureaucracies. So best to make the contribution as early as possible and not wait til the last minute at year's end or you might miss this year.)
Does the 5 year rule apply to 401k money from my former employer, that was rolled into a Roth IRA? I have had the 401k for 16 years and rolled it into my Roth IRA which I have had for 25 years?
Question. What if I moved a 10 year old Roth IRA to another financial institution and also changed mutual Funds in it? Does the 5 year rule start from zero then? Thank you.
No definitely not.
So fund a Roth IRA at 53 no matter what. Just to be on the safe side.
Yes, I would.
Iv'e heard that if one is doing a ladder conversion from a traditional IRA to a new Roth IRA (i.e., 40K per year for 10 years), each conversion resets the clock (the 5 years starts over with each conversion). Another source said each conversion has it's own individual 5 year clock). This is for folks over 59.5. I didn't hear you mention either of these situations. Which is true?
If you are over 59 and 1/2, the only five year rule that applies is to owning the Roth IRA. It’s best to open a Roth maybe at a local bank to start the clock when you are younger. If you are over 59 and 1/2 and you have had any Roth IRA open for at least five years then all distributions are qualified and tax free. That’s straight from the IRS website.
what you fail to mention is the POP (period of performance) On The Profit. . Buy $1000 stocks at age 62. It doubles to $2000 and I sell it then at age 65. Is the five year clock starting at 62 on profits? or more likely 65 when you sold and profited. So tax free at 70. What is the answer please?
You are refering to taxation on the "gains" and the answer depends on if you have had any IRA for more than 5 years and you are over ag 59 1/2. If yes and yes then the gains are available tax free.
every roth conversion starts its own five year wait....here is from fidelity...Important to know: The 5-year rule is counted separately for each conversion. The same rules apply to so-called backdoor Roth IRAs.
Yes Roth is much better. I did a traditional 457b and have to pay tax when i take it out. Took out 11,000 the other day and. with federal and Cali tax I am only getting 8500. Nobody really told me about the Roth in my 32 year law enforcement career. Its a great deal. I could convert it now but the cost would just be to much and my kids inherit the shares tax free so no point in it at this advanced age!
Are you telling that if I opened my Roth IRA when I was 30 I can withdraw my contributions and earnings at 35 tax and penalty free!😊
Anyone with a Roth IRA can withdraw contributions at any age and at anytime. That is not the case with gains, you need to wait until after eight 59 1/2. Also, if you do a Roth conversion, you can access the converted dollars after five years.
Saluda a al INE de parte de Emerson de Nicaragua
ROTH IRAs offer the advantage of tax-free growth, allowing you to keep more of your hard-earned money. I’m considering investing over $300k but not entirely sure where to start.
There are benefits to holding fixed-income assets in tax-deferred retirement funds rather than taxable accounts. If you're unsure about navigating the market, it's wise to seek guidance from a financial advisor.
It might be worth considering a financial advisor to avoid constant adjustments. Your selections are strong, especially for a $350k portfolio.
I agree-having an advisor manage my investments has been invaluable since my work schedule doesn't allow time for in-depth analysis. Thankfully, my portfolio has grown fivefold in just four years, reaching nearly $1 million today.
That's impressive! Would you mind sharing your advisor's details? I’m in urgent need of rebalancing my portfolio.
How can I find a trusted financial planner like yours?
Is it not smarter to just earn real money nobody else can counterfeit?
-Bitcoin
There are no taxes here. No politics, no counterfeiting, no theft.
Maybe there is no counterfeiting and no theft but taxes always always apply!
I'm 65. I have had an IRA and a Roth IRA for over 20 years.
I now want to convert $20k from IRA to the ROTH at age 65 & for the next 5+ years.
You are saying:
At any time, I can take any/all of my Roth conversions and earnings before "5 years" with no IRS Income taxes.
• NO 5-year clock on Roth Conversion if Roth is over 5+ years old, and Conversion started at 65
• The 5-year clock does NOT start over for each conversion, age 65, 66, 67 .....
• The 5-year clock does not apply to withdrawls on earnings, and no TAXES
In any year, after 5 years from the FIRST opening Roth in 2002, (over 59 1/2) At any time I can withdraw any/all conversions, AND earnings, no IRS taxes on earnings.
Is This Correct?
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Thanks!
@@evanotgaboring11 If you are over 59 1/2 yes.
That's how i interpreted his information. Open ANY Roth at 35.
Start Conversions at 60. (Pay tax on conversion)
ALL earnings and principle withdrawal are available immediately and tax free with no penalties.
Since you are over age 59 ½ AND has had a Roth IRA for 5 years, this you have IMMEDIATE access to all Roth IRA dollars, including any converted dollars and earnings. You will NEVER have to worry about a Roth IRA 5-year clock ever again. That includes any future conversions. ALL Roth IRA dollars, including earnings, are immediately and forever available both tax- and penalty-free.
@@FinancialFastLane Great, thank you!