Roth IRA Questions
By David – for Allan
Facts:
1. Client is converting several traditional IRA’s to 5 different Roth IRA’s, each with different types of assets (e.g. small cap, aggressive growth, international, fixed income,etc.)
2. One of the 5 new Roth converted IRA’s has a $500,000 bond which will mature within 2 months after the Roth conversion.
3. Client would like to transfer the $ 500,000 of proceeds after maturity to one of the other 4 Roth converted accounts via IRA trustee to trustee rollover transfer.
Questions:
a. Is the contemplated trustee to trustee transfer okay?
b. Can the client execute other tax free trustee to trustee rollovers among the 5 accounts prior to the October 15, 2011 recharacterization deadline?
c. Can more than one trustee to trustee rollover be executed in the one calendar year, whether Roth to Roth, Roth converted IRA to Roth converted IRA and/or Traditional IRA to Traditional IRA?
Permalink Submitted by Alan Spross on Thu, 2010-01-21 20:36
a) It is OK to do, but it will affect the earnings calculation if the client wants to recharacterize the conversions that went into the Roth holding the bond OR the Roth into which the bond Roth was tranferred.
b) Same as above. Recharacterization earnings calculations will be affected on all conversions other than those that went to a Roth that has not received funds or distributed funds. The affect could be positive or negative, meaning that either less or more dollars must go back to the TIRA upon recharacterization.
c) There is no limit on the number of direct transfers between these accounts. Transfers are not considered rollovers, and only the number of rollovers is limited to one per 12 month period.