Q. I have read conflicting information concerning VCP to ROTH conversion and the five-year rule. Based on this information, there may be a difference between the funds converted and the interest income generated in the ROTH account. Can you explain how the five-year rule applies in each case?
A. The five-year waiting period for the converted funds and the interest they produce will begin on Jan. 1 of the year of the conversion. Check page 71 of IRS Publication 590 for an explanation of the rules. You should consult a qualified tax adviser regarding the rules and how they apply to your particular case.