Q. I have received conflicting answers and would like to ask you the following: If I convert my traditional IRA to a Roth IRA, when can I withdraw the money? I am 59 and will be over 59 1/2 next year. Do I have to wait five years, or can I take it out anytime after 59 1/2?

On a side note, how did they come up with the name Roth?

A. The quick answers are: 1) You can withdraw the converted amounts without penalty when you are older than 59 1/2.

2) The Roth IRA is named after its creator, the former Sen. William V. Roth, a Republican from Delaware. He died Dec. 13, 2003, the same day Saddam Hussein was captured. Roth was 82.

A more detailed explanation of the Roth IRA conversion rules is provided below.

A conversion is a transfer of money from a non-Roth IRA to a Roth IRA. Your modified adjusted gross income must be less than $100,000 to be eligible to convert. The conversion amount must be included in gross income for the tax year in which the conversion is made and subject to regular income tax. The amount is not counted in determining whether modified adjusted gross income meets the limit of limit of $100,000.

A qualified distribution from a Roth IRA is tax-free after a five-year holding period is met. The five-year holding period begins on the first day of the first year for which contributions were made.

If you made a Roth IRA contribution between Jan. 1, 2003, and April 15, 2004, for tax year 2003, the five-year holding period begins on Jan. 1, 2003. This date is used for all contributions; subsequent contributions do not start a new five-year holding period.

The five-year holding period rule for conversions is slightly different. Each conversion amount is subject to its own five-year holding period.

Once the five-year holding period has been met, conversion amounts can be withdrawn and are not subject to a 10 percent penalty, regardless of the age of the account holder. Even when the withdrawals are not subject to any taxes or penalties, the withdrawals of earnings are subject to the same rules as regular Roth IRA contributions (allowed if age 59 1/2, first-time homebuyer, disability or death).

Conversion amounts for account holders older than 59 1/2 can be withdrawn penalty-free.

Example: A 50-year-old account holder converts $20,000 from a traditional IRA to a Roth IRA. Income tax will be owed on the $20,000 converted, but there will be no 10 percent penalty for an early withdrawal. If $10,000 is withdrawn, the next year, a 10 percent penalty will be owed on this amount.

If the withdrawal was made five years after the conversion, the withdrawal is exempt from the 10 percent penalty, even though the account holder is younger than 59 1/2. If the account holder had been age 59 at the time of conversion, no 10 percent penalty would apply to the withdrawal of the conversion amount the next year.

Another exception to the five-year holding period may be of interest if you have any money in nondeductible traditional IRAs. If any converted amounts are from nondeductible traditional IRAs, the basis would not be taxed at the time of the conversion, and withdrawal of these amounts is not subject to tax or the 10 percent penalty, regardless of how long it was in the Roth IRA before withdrawal.

Example: You convert a traditional nondeductible IRA with a cost basis of $10,000 and earnings of $10,000 to a Roth IRA. Only $10,000 would be subject to income tax, and $10,000 could be immediately withdrawn, free of tax and penalties.

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