What is post-conversion purchase date?
We converted several IRA clients to Roth IRAs at 12/31, some who had holdings from several years back. Our custodian is telling us that we must use the conversion date for the purchase date when funds are sold. The reason this matters is because some of our funds assess a 1% or 2% fee if sold within a certain time-frame after purchase and we need to sell some funds. Could anyone tell me if they are having a similar experience? I doubt what our custodian is reporting because our question had to go through several channels before anyone would give us an answer – they had not heard the question asked before.
Thanks in advance,
Johanna
Permalink Submitted by Alan Spross on Wed, 2011-01-19 16:51
Thanks for the heads up. This problem has not been reported previously but may be a question to ask the custodian prior to transfer. There may be some small clearing related costs for the fund firm, but a Roth conversion should be no different than any transfer to a new custodian without a conversion. This issue may also occur with banks if you want to convert a CD, ie early withdrawal penalty.
Hopefully, others will report if they have experienced this.
Is your custodian a broker or the mutual fund company?
Permalink Submitted by Johanna Turner on Wed, 2011-01-19 18:34
Thanks for your response. I’m not sure if I was clear on the initial post, but the conversion was done with the same custodian, which is TradePMR. They have all of the history and just assign a new account # and name, so it really doesn’t seem logical that we have to start the clock again. I have also googled for guidance without luck but am having difficulty finding a descriptive search terms.