United States Roth IRA conversions

United States Roth IRA conversions: taxable amounts, returned basis, qualified distributions and the separate five-year conversion withdrawal rules.

Qualified-distribution period

5 years plus a qualifying conditionIRS, Publication 590-B

Conversion withdrawal period

Separate 5-year period for each conversionIRS, Publication 590-B

Potential early-distribution additional tax

10%, subject to exceptionsIRS, Publication 590-B

Tax in the conversion year

Part or all of a traditional IRA conversion may be included in gross income and subjected to ordinary income tax. Taxable amounts are normally included in the conversion year. A distribution that returns basis is excluded from gross income. IRS, Publication 590-A (opens in a new tab).

Qualified-distribution five-year period

A qualified Roth IRA distribution follows the five-year period beginning with the first tax year of a contribution to a Roth IRA for the owner. It must also meet a qualifying condition, such as reaching age 59½, disability, death or the qualifying first-home rules. IRS, Publication 590-B (opens in a new tab).

Separate conversion periods

Each conversion has a separate five-year period beginning on the first day of the conversion tax year. A withdrawal within that period may trigger the 10% additional tax on the converted amount included in income. Exceptions include reaching age 59½. This period is not necessarily the same as the qualified-distribution period. IRS, Publication 590-B (opens in a new tab).

Withdrawal ordering

Nonqualified distributions are ordered as regular contributions first, then conversions and rollovers from the earliest year first, then earnings. Within conversions, taxable amounts come before nontaxable amounts. IRS, Publication 590-B (opens in a new tab).

Scope

This guide explains general conversion and distribution rules without calculating conversion tax or selecting a strategy. It excludes individual basis allocation, inherited accounts and state tax treatment. General information only, not personalised tax, insurance or retirement advice.

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