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Understanding the Two 5-Year Rules for Roth IRA Contributions and Conversions
Michael Kitces in Nerd's Eye View Link to more items from this source
Jan. 2, 2014
"[T]he first 5-year rule applies to Roth contributions and determines whether earnings will be tax-free, while the second 5-year rule applies to Roth conversions and determines whether conversion principal will be penalty-free. Each of the 5-year rules are measured from the beginning of the tax year for which they apply, which means in reality tax-free earnings or penalty-free conversion principal may be accessible in less than 5 years in certain circumstances.... Ultimately, being able to effectively navigate the various Roth 5-year rules creates several planning opportunities as well."

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