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So basically, that conversion has a 5-yr waiting period but previous contributions do not. Interesting.

Right. There are three kinds of money that can be in a Roth IRA: contributions, conversions, and earnings. Each of these different kinds of money has different withdrawal rules and different potential penalties.

However, you are correct in that a very patient person can get around the penalty for early withdrawal of their IRA money - they just have to convert to a Roth, then wait 5 years. For very early retirees, that can be a tax planning move.

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