Conversely, with some
tax - deferred accounts, you may contribute pretax dollars to qualified retirement savings plans, such as IRAs or company - sponsored 401 (k) s, in which case distributions or withdrawals are
taxed at
ordinary income tax rates when they
occur after age 59 1/2.
Any distributions of converted amounts (assuming they were taxable at the date of the conversion) will be subject to the 10 % penalty (though they'll be free from
ordinary income taxes) if the distribution
occurs less than 5 years after the first day of the year in which the conversion
occurred.