Eligible withdrawals from a Roth IRA

I look forward to your weekly Wednesday noon visits with John Williams on WGN radio. I missed this past Wednesday, Sept 20 program and listened to the segment today. You had a call from a 63 year old woman asking about what to do with about $150,000 cash she had in her IRA. She was thinking of taking a home equity loan or moving her IRA balance into a Roth IRA and then take the money from the Roth. The caller said she would soon need about $10,000. You said “you don’t need to move it into a Roth because you’ll have to wait 5 years after an account has been established before you can take it out.” I believe though that the 5 year wait rule on withdrawals from a newly created Roth IRA applies to earnings only. A person can withdraw the principal amount that was converted at any time, tax-free. In this case the $10,000 the caller would soon be needing could be withdrawn immediately as it would be considered part of the $150,000 (less any taxes due on withdrawal) converted. You may want to verify this as it may affect the caller’s decision on how to meet her needs in considering a Roth option as well as the other options and considerations you suggested.