Still confused about 10% penalty on Roth IRA withdrawals (from conversion amounts) for over age 59.5

[Guest rkal66]

Here's the situation:

1. Roth IRA funded by conversions from traditional IRA

2. Five years have NOT passed since the conversions

3. I am over age 59.5 and was when I made the conversions

4. There were no non-deductable contributions involved

If I withdraw some of the amounts, less than the amounts converted, do I have to pay a 10% penalty?

IRS Pub 590 is very confusing. When they mention the 59.5 exception, it is not clear if it applies for this case. Please help.

Dick

[BPickerCPA]

Age 59½ exception applies.

No penalty.

[GBurns]

This should help:

http://www.complianceheadquarters.com/IRA/...es/1_14_05.html

[Guest rkal66]

Thanks for the replies. My question was prompted by a friend that went into a panic when he filled out form 8606, part III. He wound up with a balance on one of the lines that told him there might be a penalty. He went to form 5329 to see if there was a penalty, and the age 59.5 exception is not listed as one of the exceptions in the instructions for the form. So he called the IRS and they told him he had to pay a penalty.

I started to panic since I have a similar situation.

I argured with him but he was convinced that since conversions are treated separtely from contributions on for 8606, that he had to pay.

He called the IRS again and got a different person that set him straight. But he's still not sure.

Dick

[jevd]

What your friend may have been told is that the earnings if withdrawn would be taxable since the deposit had not been in the account for five years and misunderstood what was said. That being said, the agent he first talked to may have been incorrect or misunderstood the circumstances.