It\’s important to understand the five-year rules for Roth IRAs when making withdrawals, especially after completing a Roth conversion. The first five-year rule applies to Roth IRA contributions, requiring account owners to wait at least five tax years from the time of their first contribution to withdraw earnings tax-free, provided they have reached age 59 ½. The second five-year rule applies specifically to Roth conversions and determines whether an early withdrawal of converted principal will be taxed. Each Roth conversion has its own five-year clock that starts on Jan. 1 of the year in which the conversion is completed. It\’s essential to be mindful of your conversion history when taking distributions to avoid potential tax consequences. If you need help navigating the five-year rules for your Roth IRA, consider speaking with a financial advisor for guidance.
