@Opus 17 wrote:
@macuser_22
I believe the five-year rule does apply to beneficiaries, see the example in publication 590-B. However, the clock does not reset. If the five-year rule was already met with the regard to the account in general and to any conversions, then it does not restart, but if the five-year clock is not met with respect to a conversion, that clock still counts for the beneficiary.
Per IRS PUB 590-b
[quote]
The 5-year period used for determining whether the 10% early distribution tax applies to a distribution from a conversion or rollover contribution is separately determined for each conversion and rollover, and isn't necessarily the same as the 5-year period used for determining whether a distribution is a qualified distribution.
Unless one of the exceptions listed later applies, you must pay the additional tax on the portion of the distribution attributable to the part of the conversion or rollover contribution that you had to include in income because of the conversion or rollover.
You may not have to pay the 10% additional tax in the following situations.
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You have reached age 59½.
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You are totally and permanently disabled.
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You are the beneficiary of a deceased IRA owner.
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You use the distribution to buy, build, or rebuild a first home.
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The distributions are part of a series of substantially equal payments.
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You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income (defined earlier) for the year.
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You are paying medical insurance premiums during a period of unemployment.
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The distributions aren't more than your qualified higher education expenses.
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The distribution is due to an IRS levy of the qualified plan.
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The distribution is a qualified reservist distribution.
[end quote]
**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.**
