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More Lowdown on Roth IRA Conversions

Last update on: Jun 22 2020

The Waiting Period

But wait, there’s more. Roth IRAs have “ordering rules.” Distributions of less than the entire IRA are assumed to be taken in a certain order. First distributed are regular contributions. Distributions of converted amounts are next. Only after regular and conversion contributions are distributed are earnings distributed. The ordering rules are important, because only distributions of earnings are taxed. Distributions of regular and conversion contributions are not taxed. So, if you are over age 59½ and convert a Roth IRA in 2010, only a distribution that exceeds your converted amount is included in gross income. Even if you are under 59½, you avoid taxes on a distribution until your entire converted amount is distributed.

Account Types & Computing Taxes

Losses & Conversion Costs

States Taxes, Changing Rates & More



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