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Lots and lots of words, but let's state the Roth IRA rules in a short and simple format.

1. The first thing to come out of the Roth IRA is contributions. These are always tax free and penalty free.

2. When contributions are exhausted, the next thing out is conversions. Conversions are always tax free. (You paid the tax at the time of conversion.) They are subject to penalty UNLESS the conversion has been in the account at least 5 years OR the owner is over 59.5 years of age. (Or dead or disabled.)

3. The last thing out of a Roth is earnings. Earnings are subject to tax AND penalty UNLESS the owner is over 59.5 years of age (or dead or disabled) AND the account has been open for at least 5 tax years.

Using the info provided in follow up posts, all of your Roth withdrawals are now tax free. You had a Roth account open before 2013 and you are over 59.5.

The thing to remember here is that there are multiple 5 year tests. There is one for penalty-free withdrawals of conversions and another for tax and penalty free withdrawals of earnings.

--Peter
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