From what I've read, if I understand correctly, you have to wait 5 years before you can make a withdrawal of converted funds, without a penalty?
Here's a somewhat more complex set of rules by kawill of the fairmark.com site. Withdrawals are considered to be in the order listed:
contributions first, then conversions oldest first (within each conversion the taxable portion of conversion first), and then earnings come out last.
The decision depends on your age at withdrawal and there is either a 5 yr clock on conversions for the spring chickens or for the older wiser folks there is a 5 yr clock on your oldest Roth (even if not in existence anymore). If you are over 59.5 y.o. and opened your first Roth over 5 yrs. ago, there is no waiting.......
And if over 59.5 y.o. but first Roth is less 5 yrs old, you can still take out your contributions/conversions. Just the earnings are an issue.
Re: Roth IRA Rules - Table Approach
Posted by: KAWill (IP Logged)
Date: October 14, 2010 11:57PM
Roth IRA Distribution Table
UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD NOT MET
Contributions: Tax-No; Penalty-No
Conversions: Tax-No; Penalty-Yes (Taxable Portion)
Conversions: Tax-No ;Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-Yes
UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD MET
Contributions: Tax-No; Penalty-No
Conversions: Tax-No; Penalty-No (Taxable Portion)
Conversions: Tax-No; Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-Yes
OVER AGE 59.5
LESS THAN FIVE YEARS SINCE OPENING FIRST ROTH IRA
Contributions: Tax-No ;Penalty-No
Conversions: Tax-No; Penalty-No (Taxable Portion)
Conversions: Tax-No; Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-No
OVER AGE 59.5
FIVE YEARS OR MORE SINCE OPENING FIRST ROTH IRA
All Distributions Are Qualified
No Taxes
No Penalties
Note: The table is not applicable to timely distributions of excess contributions or return of regular contributions.