Roth IRA Conversions

My question is concerning converting monies from an IRA to a Roth IRA. My client opened a Roth IRA on December 29th, 2017 and the monies came from an IRA. So it was a conversion. My client is age 70 and so my question is as follows: Are his conversion monies from the 2017 transaction subject to the 5-year rule?



No. Since client is over 59.5, there is no penalty for distributions of conversions in the first 5 years. However, a 5 year holding period also applies for ordinary income taxes on a Roth distribution to be qualified for tax free distributions of earnings.  Therefore, if this was the first Roth IRA contribution of any type, any earnings (which come out last) would be taxable because client first contributed to a Roth IRA less than 5 years ago.



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