The 5 year period for CONTRIBUTIONS to Roth IRA's starts at January 1 of the first tax year a contribution is made. So, if the first contribution was made 1-1-2000 (for the tax year 2000) then the 5 year period would be up 1-1-2005. There is just one 5 year period no matter how many years contributions are made.

But how about CONVERSIONS to a Roth? I don't know for certain if there is just one five year period - or if a new five year period starts each year a conversion is made? I have looked for an answer to this but cannot find where it is specifically stated. If anyone can direct me to a source I would appreciate it.

Take a look at IRS Publication 590. On page 42 of the version for 1999 tax returns, it says that the five year period begins with the first year for which either a regular or conversion contribution is made to the Roth IRA. From that, my interpretation is that there is only one five year period, and that a new one does not start when a contribution is made for the next year.

On the same page, there is a reference to an additional tax imposed on withdrawals within the five year period starting with the year a conversion is made. However, this is only to apply an additional 10% tax on withdrawals of converted amounts.

From this, I interpret that there may actually be two five year periods if someone makes a contribution in one tax year and subsequently converts a traditional IRA into the same Roth in a later tax year. In that single instance, there are two five year periods.

But, if someone converts one year and makes a regular contribution the next, there is only one five year period.

Hope this helps.

Through further investigation, I have found Reg 1.408A-6, Q&A 5. Particularly letter © which states that a separate five year period begins for each conversion to a Roth IRA.

There are two separate 5 year periods. The five year period for earnings to be withdrawn tax free starts from Jan 1 of the first year any Roth account existed (contribution or conversion).

For each conversion, however, there is a separate five year period during which the 10% penalty will apply to any withdrawal (assuming no exception is available). This also runs from Jan 1 of the year of conversion, but it is the case that each conversion has its own period. The obvious intent is to prevent an individual from converting and then withdrawing as a device to avoid the penalty.