Guest sscbarr Posted October 28, 1999 Posted October 28, 1999 Can anyone tell me about any negatives to combining conversion and contribatory Roth IRAs? I would like to use my Roths to help pay for the purchase of a new house. If I combine my roth will I have to wait 5 years from the combining to use the origional monies? And if I do combine and contribute money to my Roth in 2000 do I have to wait 5 years after that or do I have to start a new Roth?
Kathy Posted October 30, 1999 Posted October 30, 1999 You may combine your contributory and conversion Roth with no fear. The first money you withdraw from any Roth IRA you have is treated as a non-taxable distribution of your own contributions. Once those amounts have been withdrawn, the next amounts are the amounts you converted. If the withdrawal of converted funds occurs within five years of the conversion, they will be subject to a 10% penalty, if they would be subject to a 10% penalty coming out of the original IRA. Since money used for a "first-time home purchase" up to $10,000 is not subject to the premature distribution penalty, no 10% penalty there. After your own, previously taxed contributions and conversions come out, the earnings come out both subject to income tax and premature distribution penalty unless you have had any money in a Roth IRA for more than five tax years and meet one of the exceptions: Attainment of age 59 1/2 (exactly) Disability The purchase of a first home (no home ownership within 2 years) Death Sorry to be so long winded. Hope this helps!! [This message has been edited by Kathy (edited 10-29-1999).]
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