Hi Jeff!
Great questions!!
1. If I open a Roth IRA any time in 2023, it's start date is Jan 1, 2023? Yes. The rule for that conversion actually begins on January 1 of the tax year.
2. The 5 Year rule is in play to Jan 1, 2028? Yes.
3. If I move more un-taxed money into it from another account at ANY TIME in that 5 years, is that money available tax and penalty free on Jan 2, 2028, or does the 5 Year rule start every time I make a un-taxed contribution? Contributions- The five-year clock starts with your first contribution to any Roth IRA. Conversions- The five-year clock RESETS at each conversion, so you will want to keep track of your dates of conversions.
4. Or, is that money automatically taxed when it is deposited into the Roth IRA? Roth contribution/conversion/rollover is always at after tax dollar. To clarify more, if you are converting a Traditional IRA/401k (pre-tax) to a ROTH IRA, you will pay taxes on the amount converted on your tax return. You will be given a 1099R from the Company/brokerage that held the Traditional IRA/401k at tax time to report on your tax return. You will be taxed at your current tax rate (no penalty just tax on the "distribution" that is converted). I recommend to prepare for that. (you may want to consider having the company withhold taxes) If it's a contribution, you just won't get a deduction on your tax return. And if it is a rollover, ROTH to a ROTH, then there will not be any tax consequence.
Great Article:
Roth account rules and penalties
Hopefully that helps!
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