@hola9393 wrote:
Thanks again. Still, I have not been able to clarify my question. Let me illustrate with couple of examples:
Example 1: I am 50 years old today, I will open a Roth IRA next month and simultaneously fund the account with a roll-over from my Roth 401k to my Roth IRA. Those would be the only funds I will deposit in the Roth IRA ever.
Question 1: based on this example, at age 60, would a distribution from this Roth IRA account be considered a "qualified distribution" (i.e. would have no penalties and/or taxes on such distribution)?
Example 2: take example 1 mentioned above, and let's assume that I do another roll-over from my Roth 401k to my Roth IRA at age 58.
Question 2: again at age 60, would a distribution of the total balance of the Roth IRA account (which would include (1) the initial roll-over mentioned in example 1, and (2) the roll-over mentioned in example 2 at age 58) considered a "qualified distribution"?
Note couple of things:
1) Assume distributions in both examples would include everything (funds originally contributed, earnings associated to such funds, etc)
2) Contribution referred to in "Example 1" is a roll-over and not a "regular" contribution.
Appreciate any information you can share!
See the "ordering rules", figure 2-1 in IRS Pub 590-B.
https://www.irs.gov/publications/p590b#en_US_2020_publink1000231071
It makes no difference how the money gets into a *new* Roth IRA if you have not owned any Roth IRA for 5 years. Notice that the 5 year rule bypasses the age test. It is not qualified if 5 years have not passed regardless of age.
The "basis" in the Roth is not subject to tax or penalty but any earnings withdrawn can be.
**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.**
