Re: annual contribution to rollover Roth IRA

From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: annual contribution to rollover Roth IRA
Date: Tue, 6 Apr 1999 22:43:31 -0400

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>As amended, however, it seems the five-year period begins with the
>FIRST contribution an individual makes to *any* Roth IRA.

Yes.

Furthermore, withdrawals are deemed to be taken first from
contributions, then from conversions, and finally from earnings.

However, each conversion still carries an individual 5-year clock
before the expiration of which the withdrawal of conversion money
results in a penalty.  This is to plug the loophole of people getting
money out of a traditional IRA w/o paying the 10% penalty for early
withdrawal by "laundering" the money through a Roth.  But since
contributions are considered to come out first, then conversions,
regardless of what account either of them are in (or if they're in a
single account), there's no tax reason to have multiple Roth accounts.

Rich Carreiro
rlcarr@animato.pn.com
P5-100/RedHat Linux 4.2


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