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Quick ? - Roth conversion
Old 12-08-2018, 03:10 PM   #1
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Quick ? - Roth conversion

I have a quick question for a situation I'm advising my brother on. He is just over 59.5, has earned income over $6000 for 2018, will earn over $6000 in 2019, has a tIRA with $14000 in it, and has never had a Roth.

I am advising him it might be beneficial to open a Roth before the end of 2018 to start the 5 year seasoning period. He will have some pension money lump sum to roll into an IRA and convert within the next 3-4 years. I am advising him to do a $6000 qualified withdrawal from his tIRA and open a contributory Roth with an initial 20180 contribution of $6000. 2019 can be done after the first of the year, which will get the bulk of the money transferred. The reason to do it as contributions as opposed to conversion is to maintain penalty free access to the basis for the 5 year seasoning period. Are there any "gotcha's" I'm missing ?

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Old 12-08-2018, 04:37 PM   #2
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If he is over 59 1/2 then he would have penalty-free and tax-free access to any amounts converted even if the account is less than 5 years old.... he would just have to wait until the account is over 5 years old to withdraw earnings tax-free.


Contributions: Tax-No; Penalty-No
Conversions: Tax-No; Penalty-No (Taxable Portion)
Conversions: Tax-No; Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes ;Penalty-No
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