You can take your contributions without penalty, but of course it's my money but the earnings it accumulated will be with them (they will take the interests earnings it accumulates from investment while they sit around) until you turn 59.5 years old or you are dead ,lmfao! Fookin' genius legal Ponzi Scheme.

The strategies are tough for average people. They're usually done well by experts with lots of skills and knowledge.

@@JacquelineTheresa I agree. From my own experience with an investment advisor, I've got $1 million in a diverse portfolio that's growing fast. It's not just about having money for stocks; you need to know your stuff, stay determined, and be resilient.

@@ChristopherAnthony-9 Mind if I ask you to recommend this particular coach you using their service?

@@KellyClarkson122 VICTORIA CARMEN SANTAELLA is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.

@@ChristopherAnthony-9 Thank you! I entered her full name into my browser, and her website came out on top. I filled her form and i hope she gets back to me soon.

Thank you, glad it was helpful!

That is absolutely correct!

For some Roth timetables, a contribution done in December for instance, will get credit all the way back to January 1st of that same year. So by that system of counting, the 5 year requirement could be done in about 49+ months? A contribution made later, by say April 10th for example, would not get credit for the deposit all the way back to January 1st of the Roth contribution year, as I understand. Thanks for your input!

Why two?

@@FinancialFastLane I have 2 adult daughters and while I think I am still healthy to be around for a few more years, I have thought there might come a time when I could split my Roth IRA into 2 identical accounts with each daughter being a different beneficiary. Not sure in their early 40's that they understand the process to have one inherited Roth which needs to be split. Is this completely a waste of time? Thank you for the great presentation!

@@user-up3gw7zw1o you simply designate 50% to one daughter and 50% to the other. Then at your death, they will each receive an inherited Roth IRA. It cannot be split and given to them prior to your death.

The IRS does consider the TOTAL contributions across all Roth IRA accounts that you have. From the IRS stand point you have only one Roth IRA regardless of how many accounts you have have. The contributions come out first tax and penalty free but if you pull out all of the contributions and dip into the earnings then those will have a penalty prior to 59 1/2.

@@FinancialFastLane, so even if it’s technically the earnings in one account, it’s still considered contributions if you’ve contributed more than that amount in the other Roth IRA?

@@xxpowwowbluexx Yes, you only have one Roth IRA, even if you have 100 different Roth IRA accounts at 100 different custodians. The IRS says it is all one big Roth IRA.

Contact our office and we can setup a time to talk www.martinsenwealth.com

You definitely do not need to convert the full IRA. Here is a video on the 5 year rules kzfaq.info/get/bejne/i9-qZ7qilpixlWQ.htmlsi=UsTsoz6bVYT8t0qC

No you are not.

Correct.

Rollovers are not considered contributions.

Yes if you pull out the earnings before 59 1/2 but all contributions can come out tax and penalty free at any time.

The day you reach 59.5 y/o, there are no more 5 year conversion wait rules. You are now considered qualified and everything in your Roth is available tax and penalty free......I think! I kept reading and learned that any earnings withdrawn even after 59.5, but prior to the 5 year wait period ending, the earnings for that one sub 5 year conversion would be taxed. Helps to keep reading!!!!!

Yes

The wash sale has to do with capital gains taxes and only applies to non-qualified accounts. It would not apply to a Roth IRA.

Yes, zero penalties and zero taxes.

Yes, you are correct! The only thing that still has a 5 year clock are any gains accumulated after a conversion. Every Roth conversion has a 5 year clock. All of the converted dollars can be accessed tax and penalty free but not the gains on those funds if they are invested and start to have new gains.

@@FinancialFastLane Thanks for the reply, Lane. Just after I posted my question to you, I actually found the answer on the website of Cornell Law School Legal Information Institute. What I stated above in my example is correct, that no taxes or penalties are due on any part of the distribution, whether contribution or conversion or earnings. This is so complicated, I've spent untold hours on this off and on, across many days months years, ugh. About your answer, you are of course correct on a separate 5 year clock for each conversion, but it doesn't apply to my example, and I haven't looked into it further to see when it would apply. It would be good to see an example problem though. And as you say, gains on converted funds may be assessed tax and penalties, but only if they are non-qualified distributions of earnings. Qualified distributions of earnings however are not subject to tax and penalties. And per my example, my distribution is 100% qualified: I am over 59 1/2 years old, and my first Roth was set up more than 5 years ago. The first Roth set up can be either a contribution or conversion, whichever is set up first then gives you the 5 year rule start date that applies to all current and future Roths. So for my example, the earnings of any future Roth conversions will be also be qualified and not subject to taxes or penalties, even if I hold them less than 5 years. I'll post the 2 websites I found in another post here below, without web links, so it won't be removed. There are multiple excellent sample problems to illustrate the tax code. I should also say, I read on one of these sites that IRS Publication 590-B is an summary of the IRS tax code regarding all this, and is not the code itself. It was written by someone trying to summarize the code, as a guide / for general information purposes only, which may not be the exact legal tax code. That's the first time I ever read anything like that about any IRS publication, will note it for future use, ha. To be continued below (or above?)...

@@F8NcH8Ng Sorry, your conclusion is not quite complete.There is more than one 5 year clock! You have satisfied one of them but every Roth conversation has it’s own 5 year clock.

@@FinancialFastLane OK, part 2, with the websites I found to explain all this. First up is an article titled "The Taxation of Roth IRA Distributions". This is by The FI Tax Guy, and I hope this can be found by doing a search for " fi tax guy the taxation of roth ira distributions " dated July 31, 2023. There is excellent info here with sample problems, and references to the Cornell Law School Legal Information Institute and their interpretation of the IRS tax code itself. Example problem #3 (about halfway down) is closest to my sample problem above. To find the Cornell site I mentioned, do a search for " cornell law school legal information institute 1.408A-6 " . The first article references the appropriate sections in the second. Thanks for your help !!

@@FinancialFastLane Just one last thing to tie up this loose end for any future readers. Yes, every Roth conversion has its own 5 year clock, but this rule only applies to "unqualified distributions". Thus if the distributions are "qualified", then this "every Roth conversion 5 year clock" rule goes away. "Qualified distributions" = your age > 59 1/2, AND you have held your first Roth IRA (by contribution or conversion) for at least 5 years; and thus all current and future Roth distributions are tax and penalty free, whether they consist of contributions, conversions, or earnings. And the same goes for any new Roth IRAs that you set up in the future, by contribution or conversion; no tax and no penalty, you are home free forever. Or to phrase it another way, all these other confusing complicated beat-your-head-against-the-wall Roth distribution rules (5 years, taxes, penalties, contributions vs conversions vs earnings, withdrawal order of distributions) only apply to "unqualified distributions". Once you are "qualified", all these other rules go away. Also keep in mind that all your Roth IRAs are considered by the IRS to be just one single big pot, no matter how many separate Roth accounts you have, at how many institutions. Also, a Roth “contribution” is defined by the IRS as either (a) a regular contribution or (b) a conversion contribution. This specific clarification unfortunately wasn't included in IRS Publication 590-B (which is a summary/guide of the tax code but is NOT the tax code itself); but it's in the tax code, the Cornell Law School writing of the tax code (mentioned above), the "fi tax guy" article (mentioned above), and in the Kitces blog article "Understanding The Two 5 Year Rules For Roth IRA Contributions and Conversions". OK I'm worn out now, ha. Thanks Lane !!

401k’s and IRA’s are in separate buckets.

You do not need to drain your other accounts. Here’s a video with the updated rules.

There is a 5 year clock on every conversion regarding gains. When over 59 1/2 100% of coversions are available but for any new gains you would have to wait 5 years for those to be tax free.

@@FinancialFastLane tax would be paid on the full pre-tax contribution and its gains during the conversion, so it seems that only the post-conversion gains would be taxable (but not penalized) if the retiree dipped that far into the 3rd bucket and distributed earnings within the 5 years after conversion.

@@hornbaker That is correct as long as the person is over 59 1/2. If you are over 59 1/2 and you want tax free gains then you would have to wait to access the gains. If not then there the gains woud be taxed but no penalty because of age.

The conversion would be added to your gross income for that year. You typically do not want to convert a full 401(k) all in one year. It’s much better to strategically do it in smaller chunks over several years.

@@FinancialFastLane thank you

Roth conversions have a 5 year rule, so if you are under age 59 1/2 you would have a penalty if you withdrew converted funds before the 5 years.

@@FinancialFastLane So money that is rolled over from a Roth 401k to Roth IRA is considered a conversion, not contributions + earnings?

How long ago did you first establish your Roth IRA account? If it is more than 5 years ago AND you are over 59 1/2 then everything will be tax free. If you first opened your Roth less than 5 years ago, then you would need to wait until 5 year for the gains to be tax free. Hope that helps!

​@@FinancialFastLane I established my first Roth IRA in 1998 and am over 59-1/2. I started converting some traditional IRAs when I turned 60. Does that matter, or am I tax, penalty, and 5-year-rule-free when it comes to withdrawing any or all of my Roth? Can I stop creating separate Roth accounts to keep track of conversion clocks? Is the tax on distributions when I convert more traditional IRAs the only thing left to worry about?

@@generic_official Yes! Since you have had a Roth IRA for 5 years and you are over 59 ½, all Roth IRA dollars are immediately available tax and penalty free. This includes earnings on any converted dollars, even if the conversion was done recently, and on all future conversions. At this point, there are NO 5-year clocks to ever worry about. Everything is and will forever be tax-free. (As an aside, there is no need to establish different Roth IRA accounts for each conversion. IRS Form 5498 essentially “time stamps” each conversion, so all dollars can be commingled.)

I hope you are not planning to withdraw all of the funds in one year..? Roth funds are the most valuable because of the tax free growth. Maybe you are refering to a rollover and not a withdrawal?

Yes, but only if you have "earned income". If you are not working then you cannot contribute.

There are no penalties and no taxes when withdrawing contributions of a Roth IRA. So, depending on how much you have contributed that total amount could be withdrawal tax and penalty, free at any age.

@@FinancialFastLane are earnings always taxed and feed pre 59 1/2?

I have the same question

Yes, at your age, the earnings would be taxed and penalized.

Yea it is possible. I see no problem with doing that.

Generally speaking yes, but employer sponsored plans can have some unique rules set by the employer. Typically you can also do an in-service rollover to a Roth IRA when you’re over 59 1/2.

@@FinancialFastLane Thank you for the clarification.

If you are over age 59 1/2 then yes. Here is a video with the exceptions kzfaq.info/get/bejne/eK5hZ5Omv7bciKM.html

While "self directed Roth accounts" are beyond me, there is a way to buy real estate property and keep it in a Roth account. There are restrictions, like not living in it or allowing family to live in it for instance, but there are self directed Roth accounts out there. For me they're kinda complicated and the value of such an account holding would require an appraisal(annually???) Just something to maybe look into.

Gains are tax free, however there could be some exceptions if one of the 5 year rules applies to you.

while it never happened to me, I pondered the same scenario. Hopefully you will have a long lifetime of contributions and/or conversions and not need to tap your retirement accounts. Good reason to think about having a separate emergency fund!

You can contiribute for a previous year up until tax day but nothing beyong that.

If you rolled a pre-tax 401k into an after tax Roth IRA that would be called an inflight Roth conversion. Usually that is not recommended as you are probably paying too much in taxes (depending upon the size of your 401k).

Thanks for the reply! Conversion it is. It went from a 401k to Traditional IRA to Roth IRA so taxes were what they needed to be. @@FinancialFastLane

The earnings are taxable only if you have withdrawan all of your contribution dollars and all of your coverted dollars and you also withdraw the earnings on converted dollars before the 5 year time frame was met. It's not a very likely scenario. It would mean that your Roth IRA is almost depleated.

Sorry about that. I'm not sure what happened but will look into it. Thank you!

I’ve the same question. My understanding is our contribution is always penalty free, no matter when we can withdraw but I want to make sure that’s accurate.

When you no longer have "earned income". As long as you are working you can can contribute. There are no age limits.

The withdrawal order rules would be the same but there are of course some other differences. Most people rollover their Roth 401k into a Roth IRA which is something you may want to consider.

I only want to do a one time withdrawal at age 63. I’m retiring in twoyrs. What should I do?

We can’t give specific advice in the comments. You should consult a qualified financial advisor.

Yes, withdrawals from Roth accounts are tax free and they have no negative impact on Social Security.

Thank you very much for the reply and advice