Craig Wear, CFP, breaks down the Roth IRA five-year rule: each conversion has its own clock starting January 1 of the conversion year, and you need to wait five years plus be 59½ to withdraw converted amounts tax-free. If you're already 59½, you can access the principal immediately but earnings stay locked for five years.
I want to clear up some confusion that exists around the subject of the five year rule around roths. 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 this year, which is 2024, the IRS assumes that that period started January 1st of the year at 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. One of the things that is not widely known or is people get confused about is part of one of these little qualifying conditions is if you if you're already 59 and a half years old when you do the conversion, you do have to wait five years to access the earnings off of all those conversions, but you have immediate access to the converted amounts.
