IRA to Roth conversion
Does an IRA conversion to a Roth in 2010 need to be a direct transfer between the IRA and Roth accounts or can I take an indirect transfer from the IRA, use the funds for a couple of months and then deposit/convert in the Roth within the usual 60 day period to transfer from IRA to IRA? Also, in 2010 can you convert from several different IRAs to the Roth, at different times?
Permalink Submitted by Anonymous (not verified) on Tue, 2010-01-26 23:24
Both answers clearly “Yes”.
When you do a 60-day rollover conversion, be aware of the tax WH issue. Any taxes withheld means you will also have to make up the WH when the money is sent to the Roth. So, opting out is the better choice. Also, be aware of the coding issue: You will get a “1” code, not a “2” (direct transfer), so you may just need to explain that better.
pmk
Permalink Submitted by Marvin Rotenberg on Wed, 2010-01-27 18:24
I would just add that if you convert different traditional IRAs in 2010 at different times you will have to aggregate all the iRAsand pay the tax due on your 2010 return or pay the tax due rateably over 2011 &2012. The converted amount would be added to your income in those years.
Marvin