Cross-post Roth Conversion Ladder

I’ve been researching building a Roth conversion ladder. Since I am over 59-1/2, my understanding is that my conversions and earnings can be withdrawn at any time without the 10% penalty, and that the principle can be withdrawn tax free at any time. But each yearly conversion’s earnings has its own 5 year holding rule before it can be withdrawn tax-free.

So my question is: In an account that is actively traded, how can you identify which earnings go with which 5-year period? For example, in my first year suppose I invest the entire conversion into a growth stock that goes up 10x over the next 5 years, though I trade into and out of this stock freely during that time. In the second year, I invest in a stock that goes down 50% in 5 years, but again I am trading in and out with the funds available in the account. And so on and so on.

I have tried to find a suitable answer on-line and have so far been stymied. Anyone have experience with this issue?

Thanks,
DT, Ticker guide ANSS and TXT

You will probably get more responses by posting on the Tax Strategies board.

My guess is it goes by dollar amounts contributed with oldest withdrawn first.

As with everything taxes, it’s a little more complicated than that. IRS Pub 590-B p590b.pdf (irs.gov)lays out the ordering rules on how distributions are taxed, if you haven’t had a Roth IRA account open and funded for at least 5 years:

AJ