I am 75 years old and converted a SEP IRA I had since 1987 to a Roth IRA in Feb 2010. Do I have to wait 5 years before I can take tax free disbursements? If not, where do the instructions explain this situation? – Vernon


When it comes to IRAs, IRS Publication 590 has all the answers. The short answer to your question is “yes.” In order to make tax-free withdrawal of earnings from your Roth IRA, you have to make what the IRS terms a “qualified distribution.” To do this you generally have to meet the five-year rule and be at least 59 1/2. The good news is that the IRS considers the earnings to be the last part of a withdrawal. So, when you make a withdrawal from a Roth IRA the first thing to come out is regular contributions, next up conversions, and then earnings. Since you’re 59 ½ you would be able to pull out and amount equivalent to your contributions and conversions without any taxes and penalties. However, if you go beyond that before the five-year timeframe, your earnings would be subject to ordinary income tax.