No. of Recommendations: 0

Question: Can the entire amount in the IRA be distributed tax-free after 8/2006, even though all of the contributions, except the initial one, were made less than 5 tax years ago?

My understanding of the Code is that the seasoning only applies to the first contribution. That's what sets the 5 year clock ticking. Therefore, in your scenario, since the first contribution into this account was more than 5 years ago and the account holder has turned 59 1/2 then yes the entire amount can be withdrawn tax free.

Check Publication 590 before engaging in any action based on my opinions.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.