Conversion to Roth at Fidelity

[SlowMovingInvestor]

Am I correct in assuming that I can do a Traditional to Roth IRA conversion online at Fidelity as late as 30th December, and still have the conversion amount show up in 2022?

[ Yes, it would be preferrable to do it earlier, but I need to decide the amount to convert based on some more data I'm getting this week]

[rkhusky]

Before 4 pm EST on 12/30.

[WoodSpinner]

OP,

If you are having Taxes withheld then I would give yourself a bit extra time since you have to phone into Fidelity.

OTW, the online conversion tool at Fidelity is safe and reliable.

WoodSpinner

[tibbitts]

Am I correct in assuming that I can do a Traditional to Roth IRA conversion online at Fidelity as late as 30th December, and still have the conversion amount show up in 2022?

[ Yes, it would be preferrable to do it earlier, but I need to decide the amount to convert based on some more data I'm getting this week]

Yes the last trading day will work. Is this data you'll get this week going to affect the conversion amount that much? Or are you just trying to get the amount accurate to within $1 or something?

[SlowMovingInvestor]

Am I correct in assuming that I can do a Traditional to Roth IRA conversion online at Fidelity as late as 30th December, and still have the conversion amount show up in 2022?

[ Yes, it would be preferrable to do it earlier, but I need to decide the amount to convert based on some more data I'm getting this week]

Yes the last trading day will work. Is this data you'll get this week going to affect the conversion amount that much? Or are you just trying to get the amount accurate to within $1 or something?

As I mentioned on another thread. I'm trying to keep below the MAGI limit for an EV credit in 2022, so I can potentially make use of the credit next year.

I don't want to be too conservative in converting-- as I would have to be ensure that I don't go even $1 over (the credit is a cliff). So I'd like some accurate info.

[gavinsiu]

Just make sure you have a certain amount of leeway if you are contributing to the Traditional and then convert to a Roth. When I contributed tot he Traditional, it said there was a settling time period before you can convert. When you contribute to a IRA, it's doesn't settle right way.

After 3 days after contribution, the account finally said that the account is settle, but when I tried to a roth conversion, it gave me a message that a transaction is still in progress. I called Fidelity helpdesk and the first person incorrectly stated that I had exceeded my contribution limit. The second person I called informed me that even though funds are settle, they are not actually settle and he was able to do the conversion at his end.

[niagara_guy]

You could do two conversions, one now for the amount you know you will convert then one on 12/30 if you want to convert more.

On the web I found conflicting information about early closure of the stock market on 12/30/22. Does the conversion have to be done before the market closes on 12/30/22 or is midnight 12/30 ok?

[SlowMovingInvestor]

You could do two conversions, one now for the amount you know you will convert then one on 12/30 if you want to convert more.

I thought of that, but I don't want to deal with 2 1099-Rs. Yes, I know I'm being too fussy .

I already have the money in a traditional IRA at Fido, so I should be able to convert immediately.

[retired@50]

You could do two conversions, one now for the amount you know you will convert then one on 12/30 if you want to convert more.

I thought of that, but I don't want to deal with 2 1099-Rs. Yes, I know I'm being too fussy .

I already have the money in a traditional IRA at Fido, so I should be able to convert immediately.

Performing more than one conversion won't lead to more than one 1099-R. All conversions are just added together on one form, at least that's been my experience.

Regards,

[tibbitts]

You could do two conversions, one now for the amount you know you will convert then one on 12/30 if you want to convert more.

I thought of that, but I don't want to deal with 2 1099-Rs. Yes, I know I'm being too fussy .

I already have the money in a traditional IRA at Fido, so I should be able to convert immediately.

I did multiple conversions at Fidelity last year but only received one 1099R for the aggregate amount.

[tibbitts]

Am I correct in assuming that I can do a Traditional to Roth IRA conversion online at Fidelity as late as 30th December, and still have the conversion amount show up in 2022?

[ Yes, it would be preferrable to do it earlier, but I need to decide the amount to convert based on some more data I'm getting this week]

Yes the last trading day will work. Is this data you'll get this week going to affect the conversion amount that much? Or are you just trying to get the amount accurate to within $1 or something?

As I mentioned on another thread. I'm trying to keep below the MAGI limit for an EV credit in 2022, so I can potentially make use of the credit next year.

I don't want to be too conservative in converting-- as I would have to be ensure that I don't go even $1 over (the credit is a cliff). So I'd like some accurate info.

I thought I was being conservative until five minutes ago when I discovered a $5k error in my calculation for income in 2022. I have no idea how I made that mistake; I copy/paste data for the calculation and everything had made sense until just now. I had planned to have a $5k cushion after my additional final conversions later this week, but now I'm already down to a $3k cushion. I can still see having some account bonus or some other forgotten income showing up.

[Count de Monet]

I believe that if you're converting cash that can be done online. However, if the conversion is an in kind transaction, that must be done over the phone, or I suppose, in person if you have an Investor Center nearby.

[tibbitts]

I believe that if you're converting cash that can be done online. However, if the conversion is an in kind transaction, that must be done over the phone, or I suppose, in person if you have an Investor Center nearby.

Converting in-kind at Fidelity is the default when using the Transfer function online, and happens automatically and instantly (at the end of the day, that is.) What you can't do (with a Fidelity brokerage account) is convert from Fund A in traditional directly to Fund B in Roth. Or at least I haven't figured out how to; maybe it's possible. That would be easy to do with my Vanguard mutual fund account.

[kalarama]

I'm in the same boat, trying to figure out how much to convert based on not exceeding certain AGI limits. The only part of my income that I am not sure of is how gains in GSG fund will be treated. It isn't taxed like normal equity. It is a trust that issues K1 & K3 forms at the end of the year. Last year, I bought GSG and didn't sell any, but there was still a K1 indicating gains that I had to include in 2021 income. Ugh. I sold all of my GSG in 2022 (to avoid K1/K3 tax headaches every year) and have a total gain amount. But not 100% sure what the 2022 K1/K3 will indicate for income, as some of it I already paid in 2021. Ugh.

To be conservative, I think I am just going to assume all the gains for the GSG sales in 2022 will be taxed in 2022 as short term and compute Roth conversion amount appropriately. I'll probably undershoot a bit but guess it'll be a learning experience.

[JAZZISCOOL]

OP,

If you are having Taxes withheld then I would give yourself a bit extra time since you have to phone into Fidelity.

OTW, the online conversion tool at Fidelity is safe and reliable.

WoodSpinner

Interesting you have to call Fidelity to withhold taxes. I just did a Roth conversion online with Schwab and you can withhold taxes online quite easily. Good to know for the future.

[OldSport]

I'm assuming if you have funds parked in a Fidelity Rollover traditional IRA sweep account earning diddly squat, you can easily convert to Roth (assuming Fidelity Roth Account is already open), in the same sweep account, as long as the order is placed before close of business that day.

What if I were to place the Roth Conversion order at 9pm. Would that not execute until the end of the next business day?

[SlowMovingInvestor]

I'm assuming if you have funds parked in a Fidelity Rollover traditional IRA sweep account earning diddly squat, you can easily convert to Roth (assuming Fidelity Roth Account is already open), in the same sweep account, as long as the order is placed before close of business that day.

What if I were to place the Roth Conversion order at 9pm. Would that not execute until the end of the next business day?

If you do a transfer online, it seems to happen immediately in near real time even outside of market hours - at least for ETFs/stocks and Fidelity funds (not sure about non Fido MFs).

But I don't know what Fidelity considers the end of year for its reporting purposes. Midnight Eastern time on Dec 31st maybe, but I wouldn't risk it

[SlowMovingInvestor]

As a follow up, I received a distribution from Vanguard's Health Care fund on the 29th. I think it showed up on my account on the 30th.

I did check my numbers on the 29th, but not on the morning of the 30th. Otherwise, I could have made some last-minute tweaks. I did check the distribution schedule earlier, but I must not have seen that there was a distribution as late as the 29th.

Under normal circumstances, this would be a minor item. But it would be very frustrating if this causes me to lose the EV credit.

The takeaway here is to check on the last day if you have a specific requirement to meet.

[sparky123]

I did a small Roth conversion three weeks ago. It was 4 shares or about $100. Nowhere on the Fidelity website do I see a transaction amount expressed in dollars. It just says 4 shares. The ytd tax page has all zeros for both the old IRA and the new Roth IRA. Will this info show up at some point before the 1099s? Also why does it show a cost basis? The old IRA show a cost basis also.

[RetiredCSProf]

I did a small Roth conversion three weeks ago. It was 4 shares or about $100. Nowhere on the Fidelity website do I see a transaction amount expressed in dollars. It just says 4 shares. The ytd tax page has all zeros for both the old IRA and the new Roth IRA. Will this info show up at some point before the 1099s? Also why does it show a cost basis? The old IRA show a cost basis also.

If you call Fidelity, they can give you the details. In the future, you can request, over the phone, a Roth conversion in after-hours trading. That will give you the conversion using the NAV for the mutual fund at market close. For example, if fund FXXXX closes at $60.00 per share at 4pm EST and you request a partial Roth conversion of FXXXX, on the same market day, at 6pm EST, it will convert at $60.00 per share.

[JazzTime]

I know what you mean. It's a shame they don't show the amount of the transaction in dollars on the activity page. However, if you check your IRA statement and your Roth statement for the month (I still get paper statements), it will show the amount of the distribution in the summary section.

Also, cost basis is a bone I've already unsuccessfully picked with Fidelity. Let's say you bought a stock for $20 and it grew to $100 in your IRA. The IRA will show a $20 cost basis. That makes sense. When you transfer that $100 stock to your Roth, in my view the Roth account should show a $100 cost basis because you've paid tax on the $100 transfer. It's basically the same as if you sold the $100 stock, then moved the $100 cash to Roth, then repurchased the stock for $100 in the Roth. Of course, you can't actually do that transaction on the same day because it takes time for the trade to settle.

Many years ago, Fidelity would actually give you the correct cost basis. Then they stopped and simply carried over your original cost basis. I gather they think their customers want to see the growth over their entire ownership. At one time, I was able to change the cost basis to the correct cost basis - i.e., the value at the time of conversion. But then Fidelity refused to allow that change in cost basis. I had quite a considerable and lengthy argument with several layers at Fidelity. But I could not convince them to fix it. So I guess we're all stuck with incorrect cost basis information with shares transferred from IRA to Roth.

[sparky123]

What is also strange is the cost basis for the shares I converted to the Roth is $5 and the cast basis of the shares remaining in the IRA is $16. Also I did talk to them on the phone to correct an inadvertant switch to paperless statements. They could not explain the whole cost basis thing.
He said the 1099s would have the numbers in dollars.
And thanks for the closing price timing info.

[RetiredAL]

I did a small Roth conversion three weeks ago. It was 4 shares or about $100. Nowhere on the Fidelity website do I see a transaction amount expressed in dollars. It just says 4 shares. The ytd tax page has all zeros for both the old IRA and the new Roth IRA. Will this info show up at some point before the 1099s? Also why does it show a cost basis? The old IRA show a cost basis also.

Schwab is similar. A few weeks ago moved a several piles of shares from my Dad's Estate Account to my account and the history only shows shares and price, and no dollar amount.

[rkhusky]

Cost basis is of no real importance in tax-advantaged accounts.

[JazzTime]

Cost basis is of no real importance in tax-advantaged accounts.

You are partially correct. It is of no importance from a tax perspective.

But in my Roth IRA account, it would be helpful to me to know that I converted XXX shares of AAPL today at a share price of $YYY. It makes absolutely no sense to show a purchase price and date from 2012, the day I purchased those shares in my t-IRA, when I converted those shares to Roth today and paid taxes on that conversion.

[rkhusky]

Cost basis is of no real importance in tax-advantaged accounts.

You are partially correct. It is of no importance from a tax perspective.

But in my Roth IRA account, it would be helpful to me to know that I converted XXX shares of AAPL today at a share price of $YYY. It makes absolutely no sense to show a purchase price and date from 2012, the day I purchased those shares in my t-IRA, when I converted those shares to Roth today and paid taxes on that conversion.

I am not sure why they would even show cost basis in a tax-advantaged account. All you need to know is total contributions and you only need that in certain circumstances.

Vanguard doesn’t show lot-level cost-basis in tax-advantaged accounts, each fund is lumped into one big lot. In fact, they give you a warning when you go to the cost-basis section of tax-advantaged accounts.

[sparky123]

My cost basis has a little e superscript meaning estimated, so it's worse than useless, it's also confusing. It also says I can change it if I want.