Rollover IRA to Roth IRA Questions

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spdoublebass
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Rollover IRA to Roth IRA Questions

Post by spdoublebass »

My father asked me a lot of questions today and I wanted to post here and get some factual answers.

My father and mother each have their own Roth IRA's.
My Father also has a Rollover IRA in his name only. (He moved his 401K to this Rollover)

The question is can he convert money to his Roth IRA from his Rollover IRA. I have read threads on here about the pro rata rule (I don't fully understand it) and know that if he were to convert part of his Rollover to his Roth Ira, that would not be good.

I was just reading another thread here and it suggested that he might be able to take money from His Rollover IRA and convert it to Her (his wifes) Roth IRA. Is this actually possible?

Thanks for any help.
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sailaway
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Re: Rollover IRA to Roth IRA Questions

Post by sailaway »

The I in IRA is individual. The only way to change hands is death.

The pro rata rule only applies if you have some non deductible and lots of gains and/or deductible contributions. Otherwise, everything is taxable.

Why does he want to make the conversion? Some people just jump onboard because it is mentioned frequently enough, without considering whether or not it fits their situation. Usually, it is a question of how much is a good idea, if at all.
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retiredjg
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Re: Rollover IRA to Roth IRA Questions

Post by retiredjg »

spdoublebass wrote: Sun Aug 01, 2021 1:01 pm The question is can he convert money to his Roth IRA from his Rollover IRA.
Yes. He can convert as much or as little as he wants from rollover IRA to His Roth IRA.

I have read threads on here about the pro rata rule (I don't fully understand it) and know that if he were to convert part of his Rollover to his Roth Ira, that would not be good.
This is incorrect.

Unless he has made non-deductible contributions to any IRA somewhere along the line, pro-rating does not apply to him at all. He can convert as much or as little as he wants.

I was just reading another thread here and it suggested that he might be able to take money from His Rollover IRA and convert it to Her (his wifes) Roth IRA. Is this actually possible?
No. Whatever money he takes from his IRA will be taxed. If if then wants to use it to fund his spouse's Roth IRA, that is ok assuming she is eligible to make a contribution. However there is no way to do a Roth conversion on money in his IRA and have it end up in Her Roth IRA.
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spdoublebass
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Re: Rollover IRA to Roth IRA Questions

Post by spdoublebass »

sailaway wrote: Sun Aug 01, 2021 1:08 pm The I in IRA is individual. The only way to change hands is death.

The pro rata rule only applies if you have some non deductible and lots of gains and/or deductible contributions. Otherwise, everything is taxable.

Why does he want to make the conversion? Some people just jump onboard because it is mentioned frequently enough, without considering whether or not it fits their situation. Usually, it is a question of how much is a good idea, if at all.
So you are saying his Rollover to her Roth isn't possible. Thanks.

He want's to make the conversion to have more money available tax free. He stopped working and has some space to make conversions. Instead of pulling money out and putting it in the bank he wanted to know if he could convert it over.

Are you saying he can convert from his Rollover to his Roth because he doesn't have non deductible or deductible contributions? So he can choose any amount and convert it over from his Rollover to his Roth IRA?
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spdoublebass
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Re: Rollover IRA to Roth IRA Questions

Post by spdoublebass »

retiredjg wrote: Sun Aug 01, 2021 1:14 pm
spdoublebass wrote: Sun Aug 01, 2021 1:01 pm The question is can he convert money to his Roth IRA from his Rollover IRA.
Yes. He can convert as much or as little as he wants from rollover IRA to His Roth IRA.

I have read threads on here about the pro rata rule (I don't fully understand it) and know that if he were to convert part of his Rollover to his Roth Ira, that would not be good.
This is incorrect.

Unless he has made non-deductible contributions to any IRA somewhere along the line, pro-rating does not apply to him at all. He can convert as much or as little as he wants.

I was just reading another thread here and it suggested that he might be able to take money from His Rollover IRA and convert it to Her (his wifes) Roth IRA. Is this actually possible?
No. Whatever money he takes from his IRA will be taxed. If if then wants to use it to fund his spouse's Roth IRA, that is ok assuming she is eligible to make a contribution. However there is no way to do a Roth conversion on money in his IRA and have it end up in Her Roth IRA.
Thank you.

This clears it up.
He does not have a Traditional IRA, so he has never made a non-deductible (or deductible for that matter) contribution to a Traditional IRA.

Thank you very much for your help.
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retiredjg
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Re: Rollover IRA to Roth IRA Questions

Post by retiredjg »

A rollover IRA is a traditional IRA. It would have been possible to make contributions to the rollover IRA if he wanted. As long as he never made any non-deductible contributions, it does not matter.
OhioGozaimas
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Re: Rollover IRA to Roth IRA Questions

Post by OhioGozaimas »

In the future, your father might have IRA distributions for a number of uses in addition to Roth conversions. Keeping track of these transactions will help in preparing his tax returns. Any 1099-R forms issued will indicate total IRA distributions, but not show in detail where the funds “went.” Roth conversions are just another “normal” distribution.

Just a thought...
Map out your future – but do it in pencil. – Jon Bon Jovi
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