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My RMDs Are Near, So I’m Converting $700K to a Roth to Avoid Them. Do I Have to Wait to Access the Money Then?

Financial Adviser and Writer Brandon Renviro
Financial Adviser and Writer Brandon Renviro

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He was 68 years old and retired and has about $ 1.4 million in retirement accounts ($ 1.2 million in the traditional Irish Republican Army and $ 110,000 in Roth). I also receive about $ 47,000 annually in social security benefits. My RMDS is scheduled to start in 2027, and as a result, I and I and my financial advisor think about making some annual Roth transfers before 2027. All this seems to be a good plan for me, however, I get some conflicting information about when I will be able to make withdrawals from Roth.

A consultant says that he will have to wait for the standard after five years of each deposit of transferring Roth before I can make any withdrawal from this money (the transfer amount itself and any profits). However, I was also told that I can withdraw for the transfer amount without a waiting period because I am older than 59 years. For example, my Roth was established in 2015 and has a total of $ 60,000 in contributions and $ 50,000 in profits. If I was going to transfer a dung of $ 75,000 in 2024, did I have $ 135,000 to withdraw without any punishment? A consultant says that I will only have an amount of $ 60,000 to withdraw until the five years of transfer passed in 2024. What is the organization of appropriate clouds and rules under these circumstances?

Jeff

Jeff, a wonderful question. Unfortunately, this is a very confusing theme that is easily distorted. Not surprisingly, you received or found conflicting information. Fortunately, as soon as the rules are sorted and managed to keep them straight, the answer is very clear.

Since you are more than 59 years old and have a five -year root, you can withdraw any amount of money at any time from any balance in your Roth Ira (transfer or other) without incurring a tax commitment or punishment. a period.

After saying this, I am now just another man who gave you information that contradicts something else I heard, right? Instead of leaving it, let’s go through the rules and refer to the information specified from the Tax Authority. (And if you need financial advice or want to find a new advisor to work with, this free tool can help you communicate with financial advisors who serve your area.)

While Roth Iras is funded with money after tax deduction that can be withdrawn from tax exempt, there are specific rules that surround how these money is taken from your account.

The Tax Authority has three “five -year rules” for different types of IRAS, but we will discuss two of them here. The first rule of five years applies specifically to the accounts that start in the IRAS, while a separate base applies for only five years to the accounts that are converted to Roth Iraas. Keep in mind that the operation of any of the base can lead to a 10 % early impact penalty and/or income taxes on investment profits. You clearly want to avoid these taxes and penalties as possible.

2025-03-08 15:30:00

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