By Sarah Brenner, JD
IRA Analyst


Hello Ed,

I have received differing views on making a 401(k) conversion to a Roth IRA.  I’m a 64 year old retired federal employee and plan to transfer all my funds from the TSP to my traditional IRA.  From there I plan to make annual conversions to my long established Roth IRA.  Is there an issue with the five-year rule that would prevent me from being able to make withdrawals from the Roth during the next few years?  Thanks for your help.



Hi Dan,

Your plan works! You can roll over your TSP to a traditional IRA and make series of conversions to a Roth IRA without worries about taxes and penalties on any Roth distributions. How is this possible? Well, all your converted funds can be accessed tax and penalty free because you are over age 59 ½. There is no five-year holding period to be concerned about. Assuming your “long established” Roth IRA was established by a conversion or contribution more than five years ago, your earnings will also be tax and penalty free. This is because you are over age 59 ½ and your Roth IRA has satisfied the five-year holding period for qualified earnings. This five-year period never restarts.



I’ve read your articles for years.  Thank you for being a great resource to our industry!

I have a couple of questions:

  • You’ve written on the once-a-365-day-year indirect IRA rollover rule.  How is this applied?  Does the 365-day year start on the day that the distribution is paid from the distributing IRA, or on the day the funds are actually redeposited in the receiving rollover IRA?
  • If funds are distributed from an IRA, you have 60 days to indirectly roll them to another IRA to avoid making those funds taxable.  RMDs are based on prior-year-end value of an IRA.  Why couldn’t an IRA owner withdraw the funds in his IRA on December 1, then redeposit them to another IRA on January 15, making the December 31 value = $0, and negate any RMD for that year?


Thank you!



Hi Evan,

Those are both great questions and we get them all the time.

In response to your first question, the 365-day period for purposes of the once-per-year rollover rule starts with the date the distribution from the IRA is received. If that distribution is rolled over, no other distribution from any of that IRA owner’s IRA can be rolled over during that 365-day period. (IRA to plan rollovers and IRA to Roth IRA conversions are exempt from this rule.)

As far as your second question goes, the IRS is one step ahead of you. There is a special rule that requires adjustment of the December 31 balance when calculating RMDs. Any outstanding rollovers or transfers must be added back in to the balance. This prevent IRA owners from withdrawing their entire IRA balance in one year and redepositing it back in the following year to avoid RMDs.

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