Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

Mastering Roth Conversions - The 5 Year Rule Explained

12 Oct 2024 · 1 min

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0:34

A short instructional video by Craig Wear, CFP® explaining how the Roth conversion five-year rule works: each conversion starts its own five-year clock that the IRS treats as starting January 1 of the conversion year, and converted amounts can be withdrawn tax- and penalty-free only after five years have passed from the conversion year and when the account owner is age 59½ (or meets other qualifying conditions).

Questions this video answers

January 1 of the year in which you make the conversion.

Wait at least five years from the conversion year, and be age 59½ (or meet other qualifying conditions).

No — even if you convert in November, the IRS treats the clock as starting January 1 of that year.

Chapters

Let's talk about Roth conversions and that five year rule. The clock starts each time you make a Roth conversion. It has its own five year clock that starts January 1st of the year you make the conversion. So even if you make the conversion in November of this year, which is 2024, the IRS assumes that that period started January 1st of the year in which you make the conversion. In order to withdraw converted amounts free of tax and penalties, you have to wait at least five years from the conversion year and you have to be 59 and a half years old or meet other qualifying conditions.