What Is a Roth IRA Year?
A Roth IRAs year can refer to the annual contribution limits for Roth IRAs or one of the requirements for taking withdrawals of earnings penalty free.
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Contribution Limits
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The IRS limits the amount of money you can contribute to a Roth IRA each year. This contribution must be made between the start of the year and the day you file your taxes the following year. For example, you could make a Roth IRA contribution for the tax year 2009 between Jan. 1, 2009, and April 15, 2010.
Distribution Implications
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In addition to waiting until you are 59 1/2 years old, you must also wait five tax years before you are allowed to withdraw earnings from your Roth IRA penalty free. However, the five-year periods are different for contributions and conversions.
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Time Frame
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The five-year period for Roth starts from Jan. 1 of the tax year you make your contribution. For example, if you contribute for the first time on Nov. 15, 2009, your first year starts counting from Jan. 1, 2009.
Roth Contributions
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The five-year period for Roth IRA contributions is satisfied once the first contributions have been in the account for five tax years. Once the five-year period has passed for your first contributions, all contributions can be withdrawn.
Roth Contributions
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Roth IRA conversions also must remain in the account for five tax years before being withdrawn. However, each conversion has its own five-year clock. For example, if you make a conversion for the tax year 2008 and another conversion for 2010, you meet the five-year requirement for the 2008 conversion in 2013, but the 2010 conversions do not meet the requirement until 2015.
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