- Rules for IRA Withdrawals After Age 59 1/2
- How to Convert to a Roth IRA After Age 59 1/2
- How to Withdraw From IRA Accounts at 60 Years Old
- How to Calculate How Much Taxes I Have to Pay on IRA Withdrawal
- What Is Considered Qualified Earned Income for a Roth IRA?
- What Tax Advantage Is There to Heirs of an Inherited Roth vs. an IRA?
Qualified distributions from a Roth IRA -- that is, distributions that are free of tax or penalty -- must meet a two-pronged test. Reaching age 59 1/2 satisfies one-half of the test. The other half consists of satisfying the five-year holding period. Each time you convert a traditional IRA or other pretax qualified retirement plan to a Roth, you must wait five years before you can withdraw it without tax consequences. Consequently, even after age 60, if the account has been open for less than five years, a conversion withdrawal is subject to a penalty.
Check the calendar. You will meet the five-year test on Jan. 1 of the fifth year after you make the conversion. So if you converted traditional IRA funds to a Roth in August of 2010, you can withdraw them free of tax on Jan. 1, 2015. If you do not pass the five-year test, the withdrawal will be subject to a 10 percent penalty.Step 2
Tell your Roth trustee you want to make a withdrawal of the conversion amount. If you created a separate account for the conversion, you can simply liquidate that account. This might require paperwork and a fee. Otherwise, extract the funds from those with which they are commingled.Step 3
Report the withdrawal on Internal Revenue Service Form 1040 at tax-filing time. If you have satisfied the five-year rule, you need only enter the amount on line 15a. If you have not, enter the amount of the conversion distribution on lines 15a and 15b.
- calendar image by Destard from Fotolia.com