Roth IRA – First 5 year rule, When does the clock start

Submitted by David Harries on Thu, 2023-06-01 14:33

I have two Roth IRA related questions that are confusing me. I am going to break them into two separate question boxes to make the reading and answering process easier.

My first question relates to when the 5 year clock for making penalty free Roth IRA withdrawals would start in the following situation:

I was over 70 in 2019.

In 2019 I created my first ever Roth IRA. HOWEVER, it was done by a conversion from a traditional IRA.

In 2021 I made my first deposit directly into a Roth IRA account. HOWEVER, it was done for tax year 2020.

So does my 5 year period for when I first had a Roth IRA start in:

2019 when I did the Roth Conversion?

2020 which is the first Tax Year I had a direct Roth contribution?

or 2021 which is the first calendar year I actually had cash funds in a Roth IRA coming from a direct deposit (as opposed to conversion) into the Roth account?

In advance, Thank you very much for helping me clear up this confusion.



Submitted by Alan - IRA critic on Thu, 2023-06-01 15:28

  • Your 5 year holding period for qualified distributions started 1/1/2019. Your Roth will be qualified and tax free on 1/1/2024. For the rest of 2023 you could withdraw all but your earnings tax free. If you withdraw earnings this year (and they come out last), you will owe tax on the earnings, but no penalty.
  • You mentioned the penalty. While there is a separate 5 year holding period for conversions, that does not apply once you have reached 59.5. Therefore, you are not subject to any 10% penalty on any distribution of conversions.


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