My Roth IRA turned Five

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My Roth IRA turned Five

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March 23, 2016

Why is age 5 so important for your Roth IRA. Well, there is a little discussed rule around Roth IRAs. We know that they grow tax free. We know that we can take contributions out at any time without penalty. We also, know that at age 59 ½ we can start taking from either our IRA or our Roth accounts.

But what most people miss is the 5 year clock on Roths. The Roth rules say that to take distributions tax-free and penalty-free, your Roth account has to have been open for at least 5 years. That means when you turn 59 ½ your account also has to be at least 5 years old. I've been asked by clients if the clock resets each time they make a contribution; or does each contribution have its own 5 year clock. The answer is no. The clock starts when the account is first opened.

In 99% of cases, the clock is a non-factor. But if you are 55 or older and start your Roth IRA, you will not be able to take distributions penalty free at 59 ½. Check with your advisor when planning your retirement distributions.

Written by: Van Pappas CFP®
Vice President and Private CFO™, oXYGen Financial, Inc.
Request a FREE consultation: www.oxygenfinancial.net


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About the author

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Van Pappas

Vice President, Private CFO®

Van Pappas, CFP® - Van is a native of Atlanta. He holds his undergraduate degree in Finance with an emphasis in Real Estate. As a planner for 15 years, he earned his CFP designation from Kaplan University. He is currently the Chairman and founder of the Chamblee Chamber of Commerce and sits on the Downtown Development Authority for the City of Chamblee. In 2012, he noticed the value of helping the X-Y Generations and decided to merge his practice with oXYGen Financial.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. Investor Disclosures: https://bit.ly/KF-Disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Background and qualification information is available at FINRA's BrokerCheck website.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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