IRA conversions

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Stoic9
Posts: 37
Joined: Mon Dec 10, 2018 7:14 am

IRA conversions

Post by Stoic9 » Fri Jan 11, 2019 1:52 pm

I keep hitting road blocks and seem to be missing something. Is it not possible to convert a Traditional IRA at firm X to a ROTH IRA at Firm Y?

bloom2708
Posts: 6529
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: IRA conversions

Post by bloom2708 » Fri Jan 11, 2019 2:48 pm

It seems you would want to roll the Traditional IRA to institution Y first.

Are you 59.5 or older so you can withdraw from the Rollover IRA without penalty?

Once the Rollover IRA and Roth IRA are at the same institution, then you can do the Roth conversion of part/all of the IRA. That creates a taxable event for the entire portion. The income is added to the top of your other income, so you hit your top marginal bracket.

You would want to make sure you don't jump out of 22 to 24 because of the conversion (just an example). You could spread the conversion out over 2-3 years or more to lessen the tax hit.

Roth conversions work well between 59.5 and taking SS. If you have a taxable account to fill in the difference that helps. Then you are controlling the income to the top of say 12% or 22%.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

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Earl Lemongrab
Posts: 7270
Joined: Tue Jun 10, 2014 1:14 am

Re: IRA conversions

Post by Earl Lemongrab » Sat Jan 12, 2019 3:03 pm

You could certainly do it by one means or another. 60-day rollover is virtually always going to work, and for TIRA->Roth doesn't come under the one-rollover rule. I would imagine that you could do it with a direct transfer for some sort. Have you contacted the receiving custodian? It's not clear what the "roadblocks" are.

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