Q&A (back to index)
IRA Conversion
Posted by Anonymous on 12/06/2010 - 10:24
Can someone contribute $5,000 in 2010 to IRA and turn around and convert it to Roth IRA since it can be withdrawn in 5 years without 10% penalty?
Brandy Reese
San Bernardino, California
- 919 reads
Yes, but...
Yes they can, but why not contribute directly to the Roth IRA? If the taxpayer contributes $5,000 in 2010, they can remove contributions at any time without any tax consequences. If they convert from the traditional IRA, then they have the five-year waiting period to withdraw any amount converted to avoid the penalty.