Wave Systems Corp. (fka WAVXQ)

[knute97]

Toro,

I am 69 1/2 and have been contemplating turning over an IRA into a Roth.

While it's true that you are taxed in 2010 and 2011 as ordinary income on the converted amount, my understanding is that you can remove principal immediately without penalty provided you are over retirement age. Only earnings on the principal would have to be held for the 5 year period and would accrue tax free.

The following is the response that I receive from TDAmeritrade regarding this issue:

"Since you are over the age of 59.5 you may withdraw the total converted principal at any time. There is no holding period on the funds. Once you see the assets post to your Roth IRA you may request a distribution for any amount available in cash."

Consequently, what's to prevent you from converting today and immediately removing all the converted principal and delay paying taxes until 2011 and 2012?

Would like to hear from the board on this.

K97