Demystifying The Roth IRA Tax-Free Withdrawal 5-Year Rules

The Roth IRA is a powerful tool for retirement and financial independence. When used right, you can build a massive amount of tax-free wealth for you to enjoy when you retire. However, like most things in the tax code, there are some rules and complications that you must follow in order to benefit the most from your Roth IRA. two of these rules are known as the "5-year rule" for Roth IRAs. There are actually two different 5-year rules that you need to be aware of if you want to make tax-free withdrawals from your Roth IRA.

I am a big fan of the Roth IRA, especially when you can use it to retire EARLY and TAX-FREE!

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[OnCashFlow]

I am a big fan of the Roth IRA, especially when you can use it to retire EARLY and TAX-FREE!

[xaldath]

Using the ladder for early retirement, I would lean into cash savings+taxable brokerage funds for the first 4-5 years to avoid making taxable conversions during the last 4(likely high earning) years.

[hpj]

Thanks. Can you do video on mega backdoor Roth ira, conversiones to Roth ira from that account and withdrawal

[mrburns]

Nice video. Thanks. In Rule #2 you are assuming no other income correct? The conversion amount has to be below the AGI for single/married. For 2024 single that is $47, 150 for 12%. As long as the conversion amount is below this then you pay 12% tax when you convert and you can withdraw this five years later. Am I understanding this right?

[billycryer]

Thanks for clarifying the Roth Ladder process. Now I'm wondering: If I make contributions to my workplace 457b Roth account (as opposed to the traditional 457b plan), will I be able to withdraw money from the Roth 457b tax AND penalty free before 59 1/2 should I retire before then?

[jorgevelasquez]

So I'm retired, 68. 5 years ago I established a Roth account. Can I put in additional money in there now and take profits as this account grows?