Q&A: If I Close My Oldest Roth IRA, Do I Change My 5-Year Clock?

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Roth IRAs are amazing tax saving tools. Roth IRAs allow investors to grow their money tax-free. Even though there is no deduction for contributions, a Roth IRA provides the dual benefits of tax-free accumulation and tax-free distributions after age 59 1/2. The long-term benefits can be significant.

We suggest you fund your Roth IRA even when you can’t afford it and that you use taxable savings as your seed money.

Roth IRAs have one weakness. They are subject to the 5-Year Roth Rule.

The remedy for this weakness is to have opened and funded your Roth more than 5 years ago. Don’t wait. Open and fund your Roth today!

In regards to this rule, I recently received the following reader question:

I have a Roth IRA open at Fidelity. I want to switch custodians to Vanguard. The only problem is that my Fidelity Roth IRA is my oldest Roth. If I close it, does my 5-year clock start anew?

Great question! Fortunately, closing a specific account doesn’t reset your Roth clock. The official IRS 5-year test is “the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit.”

In this way, you can see that there is nothing you can do to reset this particular clock. The taxable year of your first Roth IRA contribution just is the year from which your Roth age is measured.

In this way, your old Fidelity Roth or even a long closed custodial Roth IRA funded by your parents when you were a minor would count as the first taxable year with a Roth contribution.

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Chief Operating Officer, CFP®, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 800 financial articles and is known for her expertise on tax planning.