@richard103 wrote:
Referring to the following statement from dmerz (point #2 in his / her response from Jun 5, 2019)
"...However, there is a different 5-year rule that is used to determine if earnings that occur in your Roth IRAs are tax free, qualified distributions when distributed. This 5-year rule is satisfied 5 years after the beginning of the year for which you first make a Roth IRA contribution. If your first Roth IRA is established by a Roth conversion in 2018, distributions occurring after 2022 will be qualified distributions, entirely tax free no matter how much is distributed from your Roth IRAs. Until then your tax-free distributions are limited to the converted amounts plus any regular Roth IRA contributions you might have made. Under the ordering rules for Roth IRA distributions, earnings are distributed last."
Can anyone please point me at a definitive statement, from either the IRS or TurboTax, that documents his / her point?
Here's my situation, and the way I'm interpreting dmerz' comment: I'm well over 59 1/2, so no issue there. I have one Roth IRA account. It was initially funded back in 2014 by a TIRA conversion, so from that standpoint I'm past the 5-year period, but I should note that I've made subsequent TIRA conversions and tax-paid 401K rollovers to it, including even in 2021. If I'm reading dmerz' opinion correctly though, I should be free to withdraw any and all money, including my basis and any earnings, from that Roth account here in 2021. I.e. all money in the account is now considered "qualified" by the IRS.
I guess I should say first: If I'm not reading that right, please let me know, and...
...Again, assuming I am reading it right (and that dmerz is correct), if anyone can point me at definitive documentation of dmerz' (and my) interpretation, either from the IRS or TurboTax, I'd appreciate it.
IRS Pub 590-B
https://www.irs.gov/publications/p590b
You only have one Roth IRA that can consist of any number of accounts so the term "Your Roth IRA" it refers to the aggregate total of all Roth IRA accounts.
[partial quote]
What Are Qualified Distributions?
A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.
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It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and
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The payment or distribution is:
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Made on or after the date you reach age 59½,
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Made because you are disabled (defined earlier),
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Made to a beneficiary or to your estate after your death, or
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One that meets the requirements listed under First home under Exceptions in chapter 1 (up to a $10,000 lifetime limit).
Distributions of conversion and certain rollover contributions within 5-year period.
If, within the 5-year period starting with the first day of your tax year in which you convert an amount from a traditional IRA or roll over an amount from a qualified retirement plan to a Roth IRA, you take a distribution from a Roth IRA, you may have to pay the 10% additional tax on early distributions. You must generally pay the 10% additional tax on any amount attributable to the part of the amount converted or rolled over (the conversion or rollover contribution) that you had to include in income (recapture amount). A separate 5-year period applies to each conversion and rollover. See Ordering Rules for Distributions , later, to determine the recapture amount, if any.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
