I turned 59 today! My question is on taking distributions penalty and tax free? I know you have to be 59 1/2 years old and the account must be at least five years old.

Does that mean from when the account was opened or from when deposits were made? For example can I deposit more money into the Roth account now and be able to remove when I turn 59 1/2?

Thanks

Account must be opened for 5 years or more

Yes you can add $$ as long as you are working. Wife has had a part time job for about 10 years and she has added to her Roth every year and she is past 60 year old.

After you turn 59.5 you are no longer subject to the 5 year withdrawal rule. Yes, you can contribute now and withdraw whenever you want after 59.5. Keep in mind you need to show at least the same amount of working income that you contribute for the tax year of the contribution.

I find the public misunderstands the 5 year rule......for example if you are currently 58 and you open or contribute to a Roth IRA you can withdraw without penalty 1.5 years later when you reach 59.5.

An example where the 5 year rule applies is if you are 52 you would have to wait 5 years to withdraw the contributions.....

HOW MANY MEMBERS HAVE A GOAL OF NO DEBT AT RETIREMENT?

If you have this goal, Roth 401(k)s and IRAs will get your there if you pay off your debts for house, car, etc....

What I find interesting in my profession is the amount of people that come into my office excited to inform me they have no debt to retire with.

After reviewing their investments that many times will have over 1 million dollars in tax deferred 401(k)s and IRAs. They are sad when I tell them the truth.......that they have hundreds of thousands of debt.....to the worst entity you could owe money to....THE IRS!!

We used accelerated payments and a Roth401K to eleminate a mortgage.

Two guaranteed facts...

Taxes & Death

Enjoy the ride while you can, remember you can't take it with you. Good Luck

Thank you Pitchfork!

I am not sure I under what you mean by this statement?

Keep in mind you need to show at least the same amount of working income that you contribute for the tax year of the contribution.

Making sure you understand if you make Roth contributions you must contribute earned income. It cannot be money from investment accounts etc.

What about IRA to Roth conversion?

Thank you sir!

I learned that lesson last year when I did my taxes. Fortunately I used a preparer and she caught it. I had to withdraw it from the IRA account and transfer back to my individual account. Tax laws need to be simplified but the HR Blocks, Turbo Taxes, and CPAs of this country will never let that happen.

And the real sadness comes when you have to tell them that the withdrawals will be at their ordinary income tax rates rather than at preferred rates for qualified dividend & long-term gains.

You can convert any type of investment held in pre tax qualified accounts to Roth IRAs.