Under the Required Minimum Distributions rules, IRA and qualified retirement plan participants are generally required to begin taking annual distributions from IRAs and qualified retirement plans no later than April 1 of the year after they attain age 70½.
The Worker, Retiree, and Employer Recovery Act of 2008 temporarily waived this mandatory distribution for tax year 2009.
The act says that any RMDs that had already been taken for 2009 would be eligible for rollover treatment to another IRA or qualified plan, provided other rollover requirements are met.
To be eligible for rollover treatment, the amount must be transferred to another eligible account (typically another IRA or qualified retirement plan) within 60 days of the original distribution date.
However, rollovers from a traditional IRA or qualified plan to a Roth IRA are treated as conversions, which are taxable events. By adding your RMDs to your Roth IRA, you have elected to pay tax on them for 2009. If this was not your intent, you may be eligible to reconvert it back to a traditional IRA. You should contact your IRA trustee for further information.
The "five-year rule" you mention pertains to the definition of a qualified distribution from a Roth IRA. Qualified distributions from Roth IRAs are not taxable, nor are they subject to the 10 percent penalty tax for early withdrawal. Generally, qualified distributions are distributions that are taken at least five years after Jan. 1 of the first year a contribution is made to a Roth IRA by you or on your behalf and that are made: (1) on or after the date the account owner turns age 59½ years old; (2) made to the account owner's beneficiary due to death; (3) attributable to the account owner's being disabled; or (4) made as part of a first-time home purchase.
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