Does the five-year rule restart if I open a new Roth IRA?

Understanding the Roth IRA Five-Year Rule

The Roth IRA five-year rule is a critical requirement that determines whether your withdrawals are tax-free.

How the Five-Year Rule Works

The five-year period starts on January 1 of the year you make your first Roth IRA contribution to any Roth account. This clock applies to all your Roth IRAs, even if you open multiple accounts.

Qualified Withdrawal Requirements

For a withdrawal to be qualified (completely tax-free), you must meet both conditions:

1. Five-year rule satisfied
2. One of these conditions met:
   • Age 59½ or older
   • Disability
   • First-time home purchase (up to $10,000)
   • Death (beneficiaries)

Conversion Five-Year Rule

Converted funds have separate five-year clocks for each conversion. Each converted amount must wait five years before being withdrawn tax-free, even if you're over 59½.

Valuation Documentation

Professional appraisals are important for:

• Tracking conversion values
• Documenting tax basis
• Compliance reporting
• Audit protection

Accurate valuations help ensure proper tax reporting and prevent issues with the five-year rule calculations.