Roth IRA Distributions

L1: Roth IRA DistributionsI found this site very valuable when I set up my SEPP. Now that I have reached the age of 59 1/2, I’mtax planning for Roth IRA distributions. All my Roth IRA funds are from conversions made in 2007, 2008, and 2009. I’ve read the rules about the 5 year period and age 59 1/2 for qualified distributions, but even if I make distributionsbefore the 5 year period, (ie, not qualified), it appears that there is no 10% penalty because ofthe age 59 1/2 exception. Ismy understanding correct?2010-03-14 23:15, By: Steve, IP: [98.71.79.198]
L2: Roth IRA DistributionsYes, you are correct. The 5 year holding requirement for conversions ends at age 59.5. But your Roth will not be fully qualified for tax free earnings distribution until January, 2012.While you did not indicate whether this Roth account is part of a 72t plan or not, if it was part of your SEPP universe, you did not have to wait until 59.5 because the substantially equal SEPP payments would have waived your 5 year conversion holding period penalty without even needing to reach 59.5. Of course, none of this determines how long you have to go to reach your modification date for the SEPP plan. It just relates to how you would report Roth distributions on Form 8606 and 5329 if needed.2010-03-16 01:41, By: Alan S., IP: [24.116.165.60]