Are There Age Requirements To Do a Roth Conversion? | Ed Slott and Company, LLC

Are There Age Requirements To Do a Roth Conversion?

By Beverly DeVeny, IRA Technical Expert
Follow Me on Twitter:
@BevIRAEdSlott

This is a frequently asked question, and the answer is very straightforward, but it also starts the Roth conversion conversation no matter your age.

First things first. There is no age limit to do a Roth IRA conversion.

Generally, the younger you are, the better off you will be because you have many years of tax-free compounding ahead of you. We discussed the power of compounding all of the way back in January - it's your friend.

If you are under the age of 59 ½, there is no 10% early distribution penalty on amounts you convert to a Roth IRA. You can convert to a Roth IRA in the year you turn age 70 ½. However, because this is the first year that you have a required minimum distribution (RMD) from your IRA, you will have to take the RMD before you convert any funds to a Roth IRA.

Don’t rule out doing a Roth IRA conversion while you are in your 70s or 80s. If you do not need the funds to live on each year and you have other funds to pay the income tax on the conversion, it could make sense. By reducing the balance in your IRA in the current year, you reduce the amount of your future RMDs. You are also making a “gift” to your heirs of prepaid income tax. You are paying the tax for your heirs, and you don’t even have to report it to the IRS on a gift tax return. It doesn’t reduce your estate tax exemption either.

What about the rule that says that you cannot touch your Roth IRA money for five years? It doesn’t exist!

You can always take a distribution of your Roth IRA contributions and conversions, at any time, income tax free. If you are under age 59 ½, you could owe the 10% early distribution penalty on any converted amounts you withdraw within five years of the conversion date.

You can even take out your earnings before the five years are up. But, if this is your first Roth IRA, you will pay income tax on those earnings. Again, if you are under age 59 ½, you could owe the 10% early distribution penalty on those earnings you withdraw.

Note:  Only IRA owners can convert their IRAs to Roth IRAs. IRA beneficiaries cannot convert their inherited IRAs to inherited Roth IRAs or to their own Roth IRAs.

Receive expert IRA and tax planning articles straight to your email. Subscribe here.


Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to [email protected] for approval.

For white papers/other outflow pieces:
Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:
Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:
Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.

 

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.
 

I agree to the terms and services:

You may review the terms and conditions here.