Permalink Submitted by Alan Spross on Thu, 2009-03-05 21:13
Yes. They can convert one, part of one, part of one and all of another, any combination they wish. There is also no limit to the number of conversions in a year. A separate 1099R will be issued for each IRA account, adding up all the conversion amounts in the year. Conversions can be done into the same Roth account or a different one for each conversion. Certain strategies that involve retaining the best performing conversions and recharacterizing others should be done such that each conversion is done to it’s own separate Roth account.
However, keep in mind that if the client does not like the tax bill next year or income is too high, each conversion will need to be separately recharacterized.
Permalink Submitted by bill mccormick on Sat, 2009-03-07 01:18
The company I worked for went bellyup in 2007. Converted the 401k to a traditional IRA, last six months have lost about 40%. Im 54, married, would it be wise and how much of a hit would i take in 2009 to convert the rest to my roth IRA.
Permalink Submitted by Alan Spross on Sat, 2009-03-07 04:13
You would have to add the amount of taxable conversion income to your other expected income and deductions for 2009 to determine the tax bill for the conversion. Converting too much in a single year result in a higher marginal rate than you would average in retirement, so in many cases a smaller partial conversion is more cost effective.
Permalink Submitted by Alan Spross on Thu, 2009-03-05 21:13
Yes. They can convert one, part of one, part of one and all of another, any combination they wish. There is also no limit to the number of conversions in a year. A separate 1099R will be issued for each IRA account, adding up all the conversion amounts in the year. Conversions can be done into the same Roth account or a different one for each conversion. Certain strategies that involve retaining the best performing conversions and recharacterizing others should be done such that each conversion is done to it’s own separate Roth account.
However, keep in mind that if the client does not like the tax bill next year or income is too high, each conversion will need to be separately recharacterized.
Permalink Submitted by bill mccormick on Sat, 2009-03-07 01:18
The company I worked for went bellyup in 2007. Converted the 401k to a traditional IRA, last six months have lost about 40%. Im 54, married, would it be wise and how much of a hit would i take in 2009 to convert the rest to my roth IRA.
Permalink Submitted by Alan Spross on Sat, 2009-03-07 04:13
You would have to add the amount of taxable conversion income to your other expected income and deductions for 2009 to determine the tax bill for the conversion. Converting too much in a single year result in a higher marginal rate than you would average in retirement, so in many cases a smaller partial conversion is more cost effective.