Individual has $20,000 in an IRA and they need $10,000 of that to meet some emergency need. They convert $10,000 to a Roth. That $10,000 becomes "principle" and is taxable for 2012 as income. Once in the Roth account, principle can be withdrawn at any time without penalty. The withdrawal is tax free and IRS penalty free.Net result is a $10,000 withdrawal from the traditional IRA with no penalty. There is a five year waiting period for removing money from conversions without additional tax on early distributions.PSU
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