I originally asked if the penalties and taxes SecondCor521 was referring to applied to those under 59.5. I went on to describe if not - why I then found the ordering rules to conflict with the 5 year rules.
I thought the "separate" 5 year rules for Roth contributions and Roth conversions were in place to govern what was a qualified distribution and a non-qualified distribution.
Distributions from a Roth account that was open for 5 years from the 1st contribution, came under a qualified distribution - providing the owner was over 59.5 years of age. All contributions and "earnings" were qualified distributions and not subject to penalties or taxes.
Distributions from a Roth account that affected any Roth "conversions" were considered qualified distributions - if that specific Roth conversion's 5 year timer had lapsed. All contributions and "earnings" from that specific Roth conversion were then qualified distributions and not subject to penalties or taxes.
I also thought the ordering rules really come into play when the Roth account distribution goes beyond what's considered qualified distributions and then becomes a non-qualified distribution.
Non-qualified distributions would be -
After all qualified contributions/earnings were taken from a +5 year old Roth account, along with all contributions/earnings from conversions older than 5 years.
If this is correct - only the non-qualified contributions and then earnings would follow the ordering rules and be subject to taxes and penalties.
As I see it - that would leave Roth conversions that had yet to meet their 5 year rule timers in place.
My separating Roth conversions in funds over 5 years in my original post, was for tracking simplicity of the 5yr timers (for heirs, should I pass while the timers are active).
I thought the "separate" 5 year rules for Roth contributions and Roth conversions were in place to govern what was a qualified distribution and a non-qualified distribution.
Distributions from a Roth account that was open for 5 years from the 1st contribution, came under a qualified distribution - providing the owner was over 59.5 years of age. All contributions and "earnings" were qualified distributions and not subject to penalties or taxes.
Distributions from a Roth account that affected any Roth "conversions" were considered qualified distributions - if that specific Roth conversion's 5 year timer had lapsed. All contributions and "earnings" from that specific Roth conversion were then qualified distributions and not subject to penalties or taxes.
I also thought the ordering rules really come into play when the Roth account distribution goes beyond what's considered qualified distributions and then becomes a non-qualified distribution.
Non-qualified distributions would be -
After all qualified contributions/earnings were taken from a +5 year old Roth account, along with all contributions/earnings from conversions older than 5 years.
If this is correct - only the non-qualified contributions and then earnings would follow the ordering rules and be subject to taxes and penalties.
As I see it - that would leave Roth conversions that had yet to meet their 5 year rule timers in place.
My separating Roth conversions in funds over 5 years in my original post, was for tracking simplicity of the 5yr timers (for heirs, should I pass while the timers are active).
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