IRA 5 year rule

[miyabi13]

I'm in my 60s and have several IRAs. One is a ROTH IRA I opened and funded more than 20 years ago. It has been dormant for many years and currently has a balance of $0, but it is still open.

3 years ago I opened a traditional IRA and a ROTH IRA with a different broker and have been funding and actively trading in these 2 new accounts since opening them. On their own, these 2 newer accounts would not meet the 5-year rule, but I read that the 5-year count down starts the year of your first contribution to an IRA, and then carries over to any subsequent IRAs that you later open. Is that correct? Would I be able to withdraw from these 2 newer accounts that have been open less than 5 years and not incur any penalties, and in the case of the newer ROTH IRA, withdraw money without any tax liabilities? I look forward to your comments, thank you.

[dmertz]

Correct.  Because you are over age 60 and it has been more than 5 years since the beginning of the year for which you first made a Roth IRA contribution, any distribution you now receive from any of your Roth IRAs is a qualified distribution, free of any tax or penalty.  However, because your current Roth IRA custodian(s) only know the amount of time that your current Roth IRA(s) have been open, the Forms 1099-R that they issue for Roth IRA distributions from these accounts until year 5 will have code T instead of code Q.  When entering these Forms 1099-R into TurboTax you'll simply tell TurboTax that you've met the 5-year requirement so that TurboTax will treat code T the same as code Q.