I am over 59.5 years old and have a Roth IRA older than 5 years. I understand that I can withdraw money from this tax-free.
I am looking to perform Roth conversions on money I hold in my 401k. Each Roth conversion has its own 5-year aging rule. If you make multiple conversions over more than 5 years and need to remove a significant amount of money, you can remove the basis for all the contributions. MY QUESTION > What happens if you need more and it gets into removing gain, how would you determine the gains associated with a contribution made 5 years ago when it is co-mingled with conversions less than 5 years? Is the gain pro-rated based on contributions that are 5 years and older? Would issues like this be avoided by having a separate Roth account for each year a Roth conversion is made?
Thanks.
I am looking to perform Roth conversions on money I hold in my 401k. Each Roth conversion has its own 5-year aging rule. If you make multiple conversions over more than 5 years and need to remove a significant amount of money, you can remove the basis for all the contributions. MY QUESTION > What happens if you need more and it gets into removing gain, how would you determine the gains associated with a contribution made 5 years ago when it is co-mingled with conversions less than 5 years? Is the gain pro-rated based on contributions that are 5 years and older? Would issues like this be avoided by having a separate Roth account for each year a Roth conversion is made?
Thanks.
Statistics: Posted by bikefish — Thu Aug 01, 2024 4:44 pm — Replies 3 — Views 341