rollover traditional irs to roth ira
I am considering rolling over my traditional ira to a roth ira. Do I have to do this in cash (and pay the taxes) or can I rollover the securities many of which are seriously underwater now (and pay ordinary taxes). What’s basis if they are allowed to be rolled over. WOuld I be able to sell them from the roth in 2009 and use the capital losses against capital gains I expect to have in 2009. I am 61 so would not have to worry about penalties or eligibility to withdraw from the traditional IRA. Furthermore, the “income” on which I am paying taxes from the traditional IRA, is this considered earned income or portfolio income.
JT
Permalink Submitted by Denise Appleby on Fri, 2008-12-05 05:36
[quote=”jltallent”]I am considering rolling over my traditional ira to a roth ira. Do I have to do this in cash (and pay the taxes) or can I rollover the securities many of which are seriously underwater now (and pay ordinary taxes). What’s basis if they are allowed to be rolled over. WOuld I be able to sell them from the roth in 2009 and use the capital losses against capital gains I expect to have in 2009. I am 61 so would not have to worry about penalties or eligibility to withdraw from the traditional IRA. Furthermore, the “income” on which I am paying taxes from the traditional IRA, is this considered earned income or portfolio income.
JT[/quote]
Your Roth conversion can be done in kind- no need to liquidate the securities.
Generally, the value of the conversion will be the value of the securities as of the close of business on the day the conversion occurs
Capital gains and capital losses do not apply to assets held in IRAs. Any liquidation of securities in your IRA is a non-reportable transaction and does not affect your tax return/income at all.