conversion to roth
TIRA company has told me I may do a 10%, penalty free withdrawal (no surrender fees). The check will be in my name and sent to me. I will then mail it to the ROTH company and designate this as a conversion. This does not feel right to me. I have been under the impression that conversion monies should be a direct transfer between companies. I am retired so I no longer am allowed to make regular contributions to either TIRA or ROTH. What is the correct IRS-way to proceed?
Thanks, MBD
Permalink Submitted by Alan - IRA critic on Fri, 2013-03-15 02:28
Either way. You can have the conversion done by direct transfer to the Roth IRA or you can request a distribution and roll it over to your Roth IRA as a conversion contribution within 60 days of receipt. If you take the distribution, you would ordinarily decline any withholding on the distribution, but withholding is OK if you understand all the implications.
Permalink Submitted by Maria Difalco on Sat, 2013-03-16 16:17
If I could convince the company to make out the check to ‘Company x’ fbo (my name) (my account number)–would that be better than having check made out to me? Also, should ‘conversion 2013’ be written on the check? Thanks, MBD
Permalink Submitted by Alan - IRA critic on Sat, 2013-03-16 16:59
Conversion 2013 need not show on the check or any similar notation. Having the check made out to your Roth custodian FBO you is slightly preferable to your receiving the check. But if they insist on making out the check to you, there is no downside as long as you roll the funds over to your Roth within 60 days. The tax reporting is the same.