"Hello! I drive a 2004 Subaru, drink sour beers and have a mutt. Lucky to live in Colorado. Love the show. I have an existing Roth - opened in 2020 - I will be 59.5 in 2026 so 5 year rule and 59.5 rule will be satisfied whenever I get around to using the funds after that time. No need for them for the foreseeable future. I have heard you mention that each conversion has its own 5 year clock even if I am over 59.5. Does that mean that if I want to convert stock in this down market now that I need to open a new Roth and if I want to do more next year, I need a third Roth, and so on? Or can, I just convert all of it into the existing Roth? If the answer is the former (separate Roths), can I consolidate them as they each hit the five year mark? Thank you, Jason." Download the 5 Year Rules for Roth Withdrawals: Listen to the entire Your Money, Your Wealth® podcast: Pure Financial Advisors, LLC is a fee-only Registered Investment Advisor providing comprehensive retirement planning services and tax-optimized investment management to thousands of people across the nation. Schedule a free assessment with any one of our experienced financial professionals: Office locations: Ask Joe & Big Al On Air: Subscribe to our YouTube channel: Subscribe to the Your Money, Your Wealth® podcast: IMPORTANT DISCLOSURES: • Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor. • Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations. • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. • Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. • All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. • Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors. CFP® - The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation. CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period....(read more)
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In the world of personal finance, Roth IRAs have become increasingly popular over the years. With the tax-free growth and withdrawals, it’s no surprise that many people are taking advantage of this retirement savings vehicle. But, as with any investment, there are rules and guidelines that you need to follow in order to maximize the benefits. One important rule that many Roth IRA holders overlook is the “5-year Roth clock.” This rule states that you must have held a Roth IRA account for at least 5 years before you can withdraw your earnings tax-free. This is important to remember when planning your retirement income and withdrawal strategy. However, what if you want to convert funds from a traditional IRA or 401(k) into a Roth IRA? Do you need to open a new Roth IRA account for each conversion in order to restart the 5-year clock? The answer is no. You can use the same Roth IRA account for multiple conversions, and the 5-year clock will start when you first opened the account. For example, let’s say you opened a Roth IRA account in 2010 but didn’t make any contributions or conversions until 2018. You then converted $50,000 from your traditional IRA into your Roth IRA in 2018. The 5-year clock would start in 2010, so in 2023, you would be able to withdraw the earnings from that $50,000 tax-free. It’s important to note that each conversion will have its own 5-year clock. So, if you convert another $50,000 in 2022, that conversion will have a separate 5-year clock and won’t be eligible for tax-free withdrawals until 2027. Another important thing to remember is that the 5-year clock only applies to earnings, not contributions. Your contributions can be withdrawn tax-free at any time, regardless of the 5-year clock. It’s only the earnings that need to be held in the account for at least 5 years before you can withdraw them tax-free. In summary, you do not need to open a new Roth IRA account for each conversion. You can use the same account for multiple conversions, and the 5-year clock will start when you first opened the account. Just remember that each conversion will have its own 5-year clock, and that only earnings, not contributions, are subject to the rule. So, whether you’re just starting out with a Roth IRA or considering a conversion, make sure you understand the 5-year Roth clock and how it applies to your retirement savings strategy. With a little planning and forethought, you can maximize the benefits of your Roth IRA and enjoy tax-free withdrawals in retirement. https://inflationprotection.org/5-year-roth-clock-do-i-need-a-new-roth-ira-for-each-roth-conversion-ymyw-podcast/?feed_id=76420&_unique_id=64068b297aad1 #Inflation #Retirement #GoldIRA #Wealth #Investing #5yearrothclock #5yearrulerothira #CertifiedFinancialPlanner #CFP #cpa #feeonly #Fiduciary #FinancialPlanning #financialpodcast #peerfinancial #portfoliomanagement #pureadvisors #purefin #purefinacial #purefinance #purefinancial #purefinancialadvisers #purefinancialadvisors #purefinancial #retirementplanning #retirementpodcast #roth5yearrule #rothconversion5yearrule #savingforretirement #YMYW #YourMoneyYourWealth #yourmoneyyourwealth #RothIRA #5yearrothclock #5yearrulerothira #CertifiedFinancialPlanner #CFP #cpa #feeonly #Fiduciary #FinancialPlanning #financialpodcast #peerfinancial #portfoliomanagement #pureadvisors #purefin #purefinacial #purefinance #purefinancial #purefinancialadvisers #purefinancialadvisors #purefinancial #retirementplanning #retirementpodcast #roth5yearrule #rothconversion5yearrule #savingforretirement #YMYW #YourMoneyYourWealth #yourmoneyyourwealth
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