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If I convert a conventional IRA to a Roth and wait 5 years, can I take a distribution equal to the amount I convert without paying any additional taxes, including the 10% penalty, if I am less than 59 years old? I would not touch the earnings until much later.
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>> If I convert a conventional IRA to a Roth and wait 5 years, can I take a distribution equal to the amount I convert without paying any additional taxes, including the 10% penalty, if I am less than 59 years old? <<

tom6002,

I think the answer is yes you can always withdraw your taxed-contributions after the 5-year test is met by any one of your Roth IRA accounts. Earnings require both the 5-year test and to be "qualified" in order to be withdrawn tax-free.

I'm not sure where to look at the Fool, but one place for complete information is at Fairmark:

http://www.fairmark.com/rothira/taxfree.htm

note that the author there says that "ease of tax-free withdrawl of contributions is a disadvantage since it reduces the benefits of tax-free compounding.

But you already knew that, right ?

Happy investing -

- DD
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Greetings, Tom6002, and welcome. You asked:

<<If I convert a conventional IRA to a Roth and wait 5 years, can I take a distribution equal to the amount I convert without paying any additional taxes, including the 10% penalty, if I am less than 59 years old? I would not touch the earnings until much later.>>

Yes, you can as long as the conversion money is taken after five tax-years. Note that a tax-year does not mean a calendar year. You could convert a traditional IRA to a Roth for tax-year 1998 as late as 4/15/99. However, you may take the conversion money out of the Roth IRA without taxes or penalty as early as 1/1/2003, the fifth tax-year after the conversion tax-year.

Regards….Pixy

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...but I assume that that non-taxed withdrawal counts against you in determining whether your Social Security is subject to tax?
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TheOthermfa asks:

<<...but I assume that that non-taxed withdrawal counts against you in determining whether your Social Security is subject to tax?>>

No, it does not under existing law.

Regards...Pixy
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I'm sure they'll fix that.
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