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I established a Roth IRA in the Fall of 1998 and spread the taxes over the allowed four year period. Therefore the taxes will all be paid next year in 2001. My question is how soon can I withdraw sone of the tax free money. I know the rule is that the IRA must remain in effect for five years before any withdrawals are made.

Does the five years begin on January 1st of year five which would be January 1, 2002 or must one wait until the fifth anniversary of the establishment of the Roth IRA which would be the Fall of 2002 ??

Will appreciate a valid answer.

Thanks,

Charli
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You start counting from Jan.1st 1998. The five years
expires on the aniversary date Jan.1st 2002. We have
something to look forward to! Happy 2002 - - Matthew
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Greetings Charli, and welcome. You wrote:

<<I established a Roth IRA in the Fall of 1998 and spread the taxes over the allowed four year period. Therefore the taxes will all be paid next year in 2001. My question is how soon can I withdraw sone of the tax free money. I know the rule is that the IRA must remain in effect for five years before any withdrawals are made.

Does the five years begin on January 1st of year five which would be January 1, 2002 or must one wait until the fifth anniversary of the establishment of the Roth IRA which would be the Fall of 2002 ??

Will appreciate a valid answer.>>


The IRA must be open for five tax-years. That's not the same as calendar or 12-month years. If you opened the account on any day in 1998, then the five-year holding period ends on December 31, 2002. Withdrawals may then begin on January 1, 2003. The five-year period begins on the first day of the year in which the contribution/conversion was made, and ends on the last day of the fourth year after that date. Also, be aware that to take any earnings tax-free, you must be age 59 1/2 or older. Otherwise, you must meet one of the qualified distribution requirements for a Roth IRA to avoid taxes and a penalty on any earnings taken.

Regards..Pixy
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Matthew writes:

<<You start counting from Jan.1st 1998. The five years
expires on the aniversary date Jan.1st 2002. >>


Sorry, but you will have to wait until Jan 1, 2002. You must hold the Roth for five tax-years, not four. You won't complete the fifth tax-year until Dec 31, 2002 for Roths opened in 1998.

Regards..Pixy
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Maybe we should ask Senator Roth what the "legistlatory
intent" was? - - Matthew
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Hi Pixy - Enjoy your great posts. Sorry wishful thinking, I can't even count straight! - Matthew


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