When I inherited a Roth IRA I had to transfer the funds into a custodian beneficiary Roth IRA account, but its not clear if the beneficiary's account or the original owner's account needs to have existed for 5 years for earnings to be tax free. Since the original Roth was only with the current brokerage for 3 years before my mother passed they issued a T code, but I know for certain the original Roth was over 5 years old with other brokerages included. Does the original owner or the beneficiary need to have held ownership of the Roth IRA funds for over 5 years for the earnings to be tax free? If the brokerage used a 1099R T code instead of Q are the earnings still tax free?
Newer Subscriber here. I have watched several of your videos. I appreciate the content and delivery. I have a question for you. I have a Roth IRA that is over 12 years old at a broker so first 5 year clock is met, I turned 60 a few months ago so second 5 year clock met. I am planning on moving the Roth IRA to a different broker in kind due to expense fees. Does this in any way reset or start another 5 year clock. If so would it be better to leave a minimal amount in the original Roth IRA. Thanks for your help and keep the videos coming. Steve
best explained that 5 yrs rule does not apply for converted Roth if you are 59 1/2 years old (but it still apply to the earning part) regardless how long this Roth account you have had opened.
Nope. If you are over 59 and 1/2 and have had any Roth IRA open for at least five years, then all distributions are qualified and tax free. That’s straight from the IRS website.
Iv'e heard that if one is doing a ladder conversion from a traditional IRA to a new Roth IRA (i.e., 40K per year for 10 years), each conversion resets the clock (the 5 years starts over with each conversion). Another source said each conversion has it's own individual 5 year clock). This is for folks over 59.5. I didn't hear you mention either of these situations. Which is true?
If you are over 59 and 1/2, the only five year rule that applies is to owning the Roth IRA. It’s best to open a Roth maybe at a local bank to start the clock when you are younger. If you are over 59 and 1/2 and you have had any Roth IRA open for at least five years then all distributions are qualified and tax free. That’s straight from the IRS website.
I would like clarity/ confirmation… because the chart does not address my scenario. (First- No Roth Contributions.) Over the 59 1/2 years old, a Conversion is done. As I am over the 59 1/2 years old, I can take out, without penalty (5- year rule does not apply?) But, any Earnings from the Contributions need to stay put, for 5- years… not to have the penalty. Is this statement correct?
As long as you have had any Roth IRA for 5 years AND you are over 59 ½, all Roth IRA dollars are immediately available tax and penalty free. This includes earnings on any converted dollars, even if the conversion was done recently, and on all future conversions. There are NO 5-year clocks to ever worry about. Everything is and will forever be tax-free.
My understanding. Please correct if I am wrong. Above 59 1/2 => No penalty (even if held for < 5 years). Above 5 year holding of IRA yearly fund => No penalty (even if you are
You are correct, but you need to identify which dollars you are refering to (Contributions, Conversions, Earnings). The chart you can dowload helps to clarify.
Let's say that I turn 59 1/2 and My Roth IRA been opened for five years. I than rollover my Roth 401k to my Roth IRA. Would earnings from the Roth 401k be available immediately without any tax implications? Thanks
Good question, The former Roth 401(k) dollars would follow the 5-year clock applicable to the Roth IRA. So, yes, even if the Roth 401(k) was only open for, say, 2 years, those earnings would get to “fast forward” to catch up to the 5-year clock on the Roth IRA after the rollover.
No, the Roth IRA forever clock starts when you open your first Roth IRA. Even if you have had a Roth 401k for longer, when you roll it into a Roth IRA the clock of the IRA is the clock. The Roth 401k has its own clock if you never rolled over to a Roth IRA but as soon as you do the IRA is the determining factor.
I am 58, I have never put into a roth ira, My eyes were recently just opened to all this- is it too late for me to do it now? Can I start with a thousand dollars ?where Would that somewhat get me, and in how long? Estimated of course -or am I too late? Did I miss the boat?
what you fail to mention is the POP (period of performance) On The Profit. . Buy $1000 stocks at age 62. It doubles to $2000 and I sell it then at age 65. Is the five year clock starting at 62 on profits? or more likely 65 when you sold and profited. So tax free at 70. What is the answer please?
You are refering to taxation on the "gains" and the answer depends on if you have had any IRA for more than 5 years and you are over ag 59 1/2. If yes and yes then the gains are available tax free.
Anyone with a Roth IRA can withdraw contributions at any age and at anytime. That is not the case with gains, you need to wait until after eight 59 1/2. Also, if you do a Roth conversion, you can access the converted dollars after five years.
Heard various explanations on this subject on utube. I believe yours are correct. Thanks for the simple and clear explanations. 👍
This was very beneficial. Thank you for the clear and concise explanation.
Thanks for your content.
thank you, very clear explanation
Great info. Thanks for sharing.
Very good!
When I inherited a Roth IRA I had to transfer the funds into a custodian beneficiary Roth IRA account, but its not clear if the beneficiary's account or the original owner's account needs to have existed for 5 years for earnings to be tax free. Since the original Roth was only with the current brokerage for 3 years before my mother passed they issued a T code, but I know for certain the original Roth was over 5 years old with other brokerages included.
Does the original owner or the beneficiary need to have held ownership of the Roth IRA funds for over 5 years for the earnings to be tax free?
If the brokerage used a 1099R T code instead of Q are the earnings still tax free?
Newer Subscriber here. I have watched several of your videos. I appreciate the content and delivery. I have a question for you. I have a Roth IRA that is over 12 years old at a broker so first 5 year clock is met, I turned 60 a few months ago so second 5 year clock met. I am planning on moving the Roth IRA to a different broker in kind due to expense fees. Does this in any way reset or start another 5 year clock. If so would it be better to leave a minimal amount in the original Roth IRA. Thanks for your help and keep the videos coming. Steve
Moving or rolling over your Roth IRA will not reset anything. A direct rollover has no impact. Thanks for the question!
best explained that 5 yrs rule does not apply for converted Roth if you are 59 1/2 years old (but it still apply to the earning part) regardless how long this Roth account you have had opened.
Nope. If you are over 59 and 1/2 and have had any Roth IRA open for at least five years, then all distributions are qualified and tax free. That’s straight from the IRS website.
Iv'e heard that if one is doing a ladder conversion from a traditional IRA to a new Roth IRA (i.e., 40K per year for 10 years), each conversion resets the clock (the 5 years starts over with each conversion). Another source said each conversion has it's own individual 5 year clock). This is for folks over 59.5. I didn't hear you mention either of these situations. Which is true?
If you are over 59 and 1/2, the only five year rule that applies is to owning the Roth IRA. It’s best to open a Roth maybe at a local bank to start the clock when you are younger. If you are over 59 and 1/2 and you have had any Roth IRA open for at least five years then all distributions are qualified and tax free. That’s straight from the IRS website.
I would like clarity/ confirmation… because the chart does not address my scenario. (First- No Roth Contributions.)
Over the 59 1/2 years old, a Conversion is done. As I am over the 59 1/2 years old, I can take out, without penalty (5- year rule does not apply?)
But, any Earnings from the Contributions need to stay put, for 5- years… not to have the penalty. Is this statement correct?
As long as you have had any Roth IRA for 5 years AND you are over 59 ½, all Roth IRA dollars are immediately available tax and penalty free. This includes earnings on any converted dollars, even if the conversion was done recently, and on all future conversions. There are NO 5-year clocks to ever worry about. Everything is and will forever be tax-free.
My understanding. Please correct if I am wrong.
Above 59 1/2 => No penalty (even if held for < 5 years).
Above 5 year holding of IRA yearly fund => No penalty (even if you are
You are correct, but you need to identify which dollars you are refering to (Contributions, Conversions, Earnings). The chart you can dowload helps to clarify.
Let's say that I turn 59 1/2 and My Roth IRA been opened for five years. I than rollover my Roth 401k to my Roth IRA. Would earnings from the Roth 401k be available immediately without any tax implications? Thanks
Good question, The former Roth 401(k) dollars would follow the 5-year clock applicable to the Roth IRA. So, yes, even if the Roth 401(k) was only open for, say, 2 years, those earnings would get to “fast forward” to catch up to the 5-year clock on the Roth IRA after the rollover.
Does a Roth 401k start the forever clock?
@FinancialFastLane any help here?
No, the Roth IRA forever clock starts when you open your first Roth IRA. Even if you have had a Roth 401k for longer, when you roll it into a Roth IRA the clock of the IRA is the clock. The Roth 401k has its own clock if you never rolled over to a Roth IRA but as soon as you do the IRA is the determining factor.
I am 58, I have never put into a roth ira, My eyes were recently just opened to all this- is it too late for me to do it now? Can I start with a thousand dollars ?where Would that somewhat get me, and in how long?
Estimated of course -or am I too late? Did I miss the boat?
Just start it ASAP! It's never too late if you're still working and earning money. I maxed mine out as I wound down my career to part-time.
what you fail to mention is the POP (period of performance) On The Profit. . Buy $1000 stocks at age 62. It doubles to $2000 and I sell it then at age 65. Is the five year clock starting at 62 on profits? or more likely 65 when you sold and profited. So tax free at 70. What is the answer please?
You are refering to taxation on the "gains" and the answer depends on if you have had any IRA for more than 5 years and you are over ag 59 1/2. If yes and yes then the gains are available tax free.
So fund a Roth IRA at 53 no matter what. Just to be on the safe side.
Yes, I would.
Saluda a al INE de parte de Emerson de Nicaragua
Are you telling that if I opened my Roth IRA when I was 30 I can withdraw my contributions and earnings at 35 tax and penalty free!😊
Anyone with a Roth IRA can withdraw contributions at any age and at anytime. That is not the case with gains, you need to wait until after eight 59 1/2. Also, if you do a Roth conversion, you can access the converted dollars after five years.
Is it not smarter to just earn real money nobody else can counterfeit?
-Bitcoin
There are no taxes here. No politics, no counterfeiting, no theft.