Suze Orman's Women & Money (And Everyone Smart Enough To Listen)
Suze School: Clearing Up The Roth 5 Year Rule
Feb 4, 2024
Suze Orman explains the five-year rule for Roth IRAs, including taxation differences from traditional accounts. She discusses converting traditional IRAs to Roth IRAs, meeting the five-year rule, and gradual conversions. The podcast also emphasizes prioritizing people, money, and things for financial success.
23:09
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Quick takeaways
- The five-year rule for Roth retirement accounts states that any money in a Roth account must be open for at least five years and the account holder must be 59 and a half years of age or older to make penalty-free withdrawals.
- Converting traditional IRAs to Roth IRAs triggers a new time clock for the converted amount, and keeping a record of these conversions is crucial to meeting the five-year rule.
Deep dives
Understanding the Five-Year Rule for Roth Retirement Accounts
The podcast episode discusses the importance of understanding the five-year rule for Roth retirement accounts. The five-year rule applies to Roth IRAs, Roth 401ks, Roth 403bs, and Roth TSPs. It states that any money in a Roth retirement account must be open for at least five years and the account holder must be 59 and a half years of age or older to withdraw money without penalties. The rule is different for contributory Roth IRAs, where the original contributions can be withdrawn without penalties, but earnings cannot be touched until the account has been open for five years.
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