I have some SEP-IRA money that I am considering rolling over to a Roth IRA. Since Roth contributions can be pulled out without penalty, is it possible to roll over a SEP-IRA to a Roth IRA then immediately pull out the contribution to avoid the penalty? I realize taxes will still be paid on this.

  • I believe it incurs a 10% penalty if it's been in the Roth for less than 5 years and you're less than 59.5 years old. I'll let someone answer who knows that with 100% certainty though. Commented Apr 7, 2020 at 2:39
  • The magical phrase here is "taxable conversion". This is a "taxable conversion", not a "contribution". Commented Apr 7, 2020 at 2:46

1 Answer 1


No, there is a penalty on withdrawing money from a Roth IRA that came from a conversion (according to the ordering rules for Roth IRA withdrawals) within 5 years of the conversion, but only on the part of the conversion that was taxable. See the section Distributions of conversion and certain rollover contributions within 5-year period in Publication 590-B.

So if you convert fully pre-tax money from an IRA to Roth IRA, it is all taxable, which means there will be a penalty (but no tax) if you withdraw the principal of the conversion within 5 years. On the other hand, if you do a conversion as part of a "backdoor Roth IRA contribution" (a non-deductible Traditional IRA contribution followed by a conversion to Roth IRA), assuming you had no previous pre-tax money in the Traditional IRA or other pre-tax IRAs, that conversion was completely non-taxable, which means that the conversion principal can be withdrawn at any time without tax or penalty.

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