Do I have a 10% penalty if i convert a traditional ira to an existing Roth ira if I take money out within 5 years? I am 60.

[fireman0175]

I have read the IRS publications and some other comments, but not quite clear. If i convert an ira to an existing roth ira that I have had for 7 years, am I subject to the 10% penalty if I withdraw proceeds above my original contributions within 5 years of the conversion? I have read a few comments that say if you have one Roth for over 5 years, you have met that 5-year rule already and this is a loop hole and you will not ever have to meet it again for future conversions. Is that correct or wrong?

[dmertz]

Since you are over age 59½, there is no early-distribution penalty on any distribution from your Roth IRA.  If it has been more than 5 years since the year for which you made your first Roth IRA contribution, any distribution from your Roth IRAs is a qualified distribution, entirely nontaxable even if the distribution includes earnings.

[fireman0175]

Does that apply to conversions into an existing Roth too?  Referring to earnings on those monies converted...

[dmertz]

All of your Roth IRAs are treated as if they were one.  Distributions from your Roth IRAs are all treated the same.

[NCperson · Accepted solution]

@fireman0175  to make it simple, if you meet these two conditions, NOTHING that is distributed from the Roth IRA will ever be subject to any tax: 

1) you are over 59.5 years old AND

2) your oldest Roth account has been open for at least 5 calendar years.

doesn't matter if they money is contribution dollars, conversion dollars or earnings.  It's all tax free.