A reader wrote in asking about a Roth IRA, so our columnist broke it down for them.
Q: I am unclear on how to treat withdrawals from a Roth IRA after I have made multiple partial conversions. I know each conversion starts its own “five-year-rule,” but I don’t see a clear way to know how to associate earnings with each conversion. I haven’t been able to find any information on how to treat earnings when multiple Roth conversions are made in the same Roth IRA. Can you shed any light on this for me?A.: Chris, it is not super simple, but is simpler than you fear.
3. Next out are amounts converted less than five years ago. You would have paid the tax at time of conversion but not paid the 10% penalty that normally applies to amounts coming out of an IRA before age 59½. So, if you take out more than the contributions in #1 and the older conversions in No. 2 and are still under 59½, you pay the 10% when you get to these converted funds.
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