Bob Carlson (Forbes): What You Need To Know About The Confusing Roth IRA Five-Year Rule (September 29, 2021)

Bob Carlson, of Forbes, has have made available for download his article, “What You Need To Know About The Confusing Roth IRA Five-Year Rule,” published in Forbes. The article begins is as follows:

There’s a lot of interest this year in converting traditional IRAs and 401(k)s to Roth IRAs. Some people hesitate to convert their IRAs, however, because of concerns about the confusing “five-year rule” for Roth IRAs.

Future distributions from a Roth IRA are tax free when they are “qualified distributions.” Meeting the five-year rule is one of the requirements for a distribution to be qualified.

The five-year rule is confusing partly because there really are two five-year rules. One five-year rule determines if a distribution from a Roth IRA avoids income taxes. The other five-year rule determines if a distribution taken before age 59½ avoids the 10% early distribution taxes.

Most of the time spent worrying about the five-year rule is wasted, because for most people it won’t be relevant. I’ll explain why after discussing the five-year rules.

Click here to view Bob Carlson’s summary of “What You Need To Know About The Confusing Roth IRA Five-Year Rule”

Posted by Bennett Mansour, Associate Editor, Wealth Strategies Journal.

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