Would the CD version of turbo tax 20 21 have allowed me to access form 8283? The first time I was able to see this form when using the online version was when it was printed after filing.
Converting a traditional IRA to a Roth can have great financial planning benefits. However,
One potential trap to be aware of is the so-called "five year rule." You can withdraw regular Roth IRA contributions tax- and penalty-free at any time or any age. Converted funds, on the other hand, must remain in your Roth IRA for at least five years. Failure to abide by this rule will trigger an unwelcome 10% early withdrawal penalty.10
The five-year period starts at the beginning of the calendar year that you did the conversion. So, for example, if you converted traditional IRA funds to a Roth IRA in November 2021, your five-year clock would start ticking on Jan. 1, 2021, and you'd be able to withdraw money without penalty anytime after Jan. 1, 2026. Remember, this rule applies to each conversion, so if you do one in 2021 and another in 2022, the latter transfer will need to be held in the account for a year longer to avoid paying a penalty.
If the value of your retirement account has dropped, that could be a good time to convert to a Roth IRA because the tax impact will be less onerous than when your account is worth more.
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