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Dear Investors:
I read that you are required to have a Roth for 5 years to take money out without taxes when you are 59 1/2. If I invest in a different fund each year for 5 years, will only the first fund count towards the 5 year limitation?

For example, Year 1 I invest in Seligman.
Year 2, I choose Putnam.
Year 3, I choose First American. Etc. Etc.
Each year, I have funds invested in Roth, but in entirely different organizations. Will all 5 contributions be considered in the same "pool" to qualify for the 5 year waiting period, or will I have to wait 5 years on each company? For example, at the end of 5 years, only the Seligman was actually there for 5 years. Does this force me to invest in the same company for five years? If all 5 investments were in Seligman, then all 10,000 should be eligible instead of only 2000.

Rich Locus
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Greetings, Rich, and welcome. You wrote:

<<I read that you are required to have a Roth for 5 years to take money out without taxes when you are 59 1/2. If I invest in a different fund each year for 5 years, will only the first fund count towards the 5 year limitation?>>

You are confusing the container with its contents. Your Roth IRA merely holds the investment, and the investment can be virtually anything you wish. You may change the investment as often as you want, but that doesn't change the IRA. As long as that IRA has been open for five tax-years, you may begin tax-free withdrawals at age 59 1/2 regardless of what the money is invested in at that time or for how long that particular investment has existed inside that IRA.

Regards..Pixy
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Hi Pixy! Just to clarify further, suppose I continue
adding to my Roth over a five year period and then wish to take it all out taxfree, is that possible? Or can I take out only the contribution for the first of the five years?
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Greetings, Mattpam, and welcome. You asked:

<<Hi Pixy! Just to clarify further, suppose I continue
adding to my Roth over a five year period and then wish to take it all out taxfree, is that possible? Or can I take out only the contribution for the first of the five years?>>


You may take your annual contributions at any time without regard to the 5-year rule and without a tax impact. You may not touch the earnings and get them tax-free until you are age 59 1/2 AND the account has been open for five tax-years unless you meet one of the exceptions for a qualified withdrawal. See our IRA area at http://www.fool.com/money/allaboutiras/allaboutiras.htm for details.

Regards..Pixy
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