The Roth IRA 5 Year waiting period Start Date

[Guest]

A Roth IRA contribution today(2/11/2000) results in a 5 year waiting period start date of 1/1/1999. If I then make IRA conversions to this Roth IRA will all conversions have the same start date of 1/1/1999 and therefore the same 5 year waiting period end date of 12/31/2003?

Furthermore if I continue to convert from an IRA to this Roth IRA after 12/31/2003 will these conversions have a 5 year year end date of 12/31/2003 and therefore be immediately withdrawable without penalty?

[BPickerCPA]

If you contribute to a Roth IRA now for 1999, your start date for purposes of determining when your Roth is more than five years old will start on 1/1/99.

However, you also have a five year wait period for EACH conversion. So if you convert to a Roth in 2000, the five year wait period for this conversion will be 1/1/2000. If you do another conversion in 2003, that five year period will start on 1/1/2003.

You should understand that in addition to the Roth being over five years old, you also have to be over 59½. Once you attain age 59½, you needn't worry about the five year period after conversions since the penalty won't apply anyway.

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Barry Picker, CPA/PFS, CFP

New York, NY

[John G]

It is nice to know all your options... such as Roth withdrawals. But remember that the value of a tax shelter is partially a function of how long you shelter the funds. I would imagine you are aware of how hard it is to get funds into a shelter, and your personal access could change if you income goes up, you get married or someone in Congress sneezes. Therefore, in most cases, you want to consider other sources of funds before taping into a Roth.