Out-to-Lunch
Thinks s/he gets paid by the post
lol. Great learning experience for me.
Great!
Of course, this only comes into play if you will have already withdrawn a sum exceeding the total of your 2022-2026 back-door conversions.
lol. Great learning experience for me.
Great!
Of course, this only comes into play if you will have already withdrawn a sum exceeding the total of your 2022-2026 back-door conversions.
This can get very complicated and confusing. My first Roth was opened in 2022 and I started contributing to my wife and I Roth IRA by doing backdoor Roth conversions. I will continue this approach through 2025. This year, I will be 58 and my wife will be 61. Can you help answer the following questions below based on my situation (wife and I):
2022 Backdoor Roth conversion
When are conversion dollars available to Withdraw without 10% penalty?
When are growth dollars (earnings) available to Withdraw without 10% penalty?
When are conversion dollars available to Withdraw without paying taxes?
When are growth dollars (earnings) available to Withdraw without paying taxes?
2023 Backdoor Roth conversion
When are conversion dollars available to Withdraw without 10% penalty?
When are growth dollars (earnings) available to Withdraw without 10% penalty?
When are conversion dollars available to Withdraw without paying taxes?
When are growth dollars (earnings) available to Withdraw without paying taxes?
2024 Backdoor Roth conversion
When are conversion dollars available to Withdraw without 10% penalty?
When are growth dollars (earnings) available to Withdraw without 10% penalty?
When are conversion dollars available to Withdraw without paying taxes?
When are growth dollars (earnings) available to Withdraw without paying taxes?
2025 Backdoor Roth conversion
When are conversion dollars available to Withdraw without 10% penalty?
When are growth dollars (earnings) available to Withdraw without 10% penalty?
When are conversion dollars available to Withdraw without paying taxes?
When are growth dollars (earnings) available to Withdraw without paying taxes?
Also the answers to the first two questions given about conversion dollars being available to you now don't seem correct to me. Conversions generally have a 5-year waiting period of the Roth withdrawal is non-qualified
It is possible that I am missing something in that it has been a long tiring day for me.
Not all conversions are treated the same. Conversions where you had to pay a tax to convert ("Taxable conversions") require a 5-year waiting period to avoid the penalty. Non-taxable conversions, like those under consideration here, do not require a 5-year wait.
https://www.bogleheads.org/wiki/Roth_IRA#cite_note-23
Not all conversions are treated the same. Conversions where you had to pay a tax to convert ("Taxable conversions") require a 5-year waiting period to avoid the penalty. Non-taxable conversions, like those under consideration here, do not require a 5-year wait.
https://www.bogleheads.org/wiki/Roth_IRA#cite_note-23
This has been a long winded one....
Has never seemed all that complicated to me...
"Withdrawal rules for Roth IRAs are more flexible than those for traditional IRAs and 401(k)s. Account holders can always withdraw their contributions without incurring taxes or penalties. People over 59½ who've held their accounts for at least five years can withdraw contributions and earnings with no tax or penalty."
Well okay (conversions are complicated) , but what about the growth/earnings dollars mentioned in item 2 and 4? I think the rules on earnings/growth are more straight forward.
I was under the impression that earnings would never be tax & penalty free unless the distribution was "qualified" (ie usually met by the owner being age 59 1/2 AND the their first Roth IRA being opened at least five years ago).
The last section of IRS form 8606, which addresses non-qualified Roth distributions, would seem to confirm this (ie that the earnings would be taxable in a non-qualified distribution). By earnings I am referring to what is left in the Roth IRA after all the contribution basis (8606 line 22) and conversion basis (8606 line 24) have been distributed.
-gauss