DownwardSpiral Wrote:<<I'm in a similar situation, having just opened an IRA for a 16-year-old. I want to roll it into a Roth, but it would be silly to leave this amount segregated by itself for 50 years. ...>>Pixy replied:<<Not 50 years, just 5. After five tax-years, the conversion IRA is just like a contributory IRA in that the rollover is now free to be withdrawn without penalty. Therefore, there is no reason in the world after the five years has run to keep that money in a separate account.>>I've reviewed several ROTH agreements. None of them say the segregation requirement expires in 5 years. This is not a great concern. If the law remains unchanged, I expect custodians will amend the agreement when this becomes an issue in 2003.I am concerned that the segregation requirement gives congress a 5 year window to pass 'technical corrections' with further distinctions between rollover and contributory ROTHs. These mayharm people with mixed accounts or who wereplanning to combine small accounts. The congress critters can say "It's your own fault - you were warned to keep them separate."This is particularly likely as the rationale for separate accounts is paper thin. The IRS couldhave achieved the same result, without makingpeople jump through hoops, by using a differentorder for withdrawals from mixed ROTH accounts.
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