Distributions of funds that ware nontaxable at conversion are not subject to the 10% recapture of an early-distribution penalty because they would not have been subject to the penalty had they simply been distributed from the traditional IRA without converting them to Roth. Only the portion that would have been subject to an early-distribution penalty had the distribution not been converted to Roth, the $100 of gains, is subject to a recapture of this penalty if distributed before 5-year conversion clock has been completed and you have not reached age 59½.
