Consolidating multiple Roth accounts after conversion
If I open separate Roth accounts when converting different investments in my current Rollover IRA to simplify recharacterizing later if the value of a specific investment decreases, and if no recharacterizations take place, are there any issues in the future with consolidating the Roth accounts into a single Roth, or even into my existing and separate Roth account, to simplify statements and recordkeeping, or would the multiple Roth accounts need to remain separate?
Thanks.
Permalink Submitted by Alan Spross on Sun, 2010-01-03 19:39
Once the extended due date has passed (10/15 of the year following the conversion year), the accounts can be combined since recharacterization is no longer possible.
Some people may like to keep these accounts for 5 years and title them to show the year of the conversion for easier tracking of the 5 year conversion holding requirement. However, they would still have to go back to the original date on that account to determine how much of the value was the actual converted amount. However, there are other ways to keep tabs on the converted amounts such as a simple log showing the date and amount of each conversion and whether that conversion remains in the Roth or has been distributed or recharacterized. This would allow the accounts to be consolidated to simplify record keeping.
Roth tax rules consider all the Roth accounts as if they were in a single large Roth, so consolidating does nothing to change the tax result of a distribution.