TIRA-ROTH Conversion, company rules

Submitted by Maria Difalco on Wed, 2015-09-02 18:58

Hello Allen! I have both a Tira and Roth with same company. I wish to do a TIRA conversion to a different Roth plan. Company tells me their policy is to convert to a new Roth with their company. Would I be able to take a withdrawal and then roll over the amount to the Roth of choice within 60 days and still consider this a conversion reported on form 8606? I know that taxes will be due no matter what the choice is.

Since retirement I have done partial conversions with no problems. RMD for all TIRAs has been taken from one other account, so that is not an issue here.

Also as I understand the “1/12” rule, regardless where the money ends–if I do a rollover I must wait a minimum of 1 year and 1 day before initiating another rollover. However there are no restrictions for conversions.

Lastly–any information as to status of QCD’s for 2015?

Thanks,
MBD



Submitted by Alan - IRA critic on Wed, 2015-09-02 19:51

  • Yes, you can do the conversion by an indirect 60 day rollover to any Roth IRA of your choosing. The current company cannot restrict your distribution in any way, but I suppose they could charge you an account closing fee if you roll out the entire balance. Be sure to specify that you decline withholding unless you actually want a portion withheld from your TIRA distribution. Note that this rollover does not count against the one rollover per 12 month limitation since you are converting it. Tell the Roth custodian that your contribution is a conversion contribution so they report it in the correct box of the 5498 they will issue next May.
  • No word on 2015 QCDs yet, so I expect we are headed for more year end legislation to extend the QCD. Of course, since you have already distributed your 2015 RMD, you could still do a QCD but it would not cover your RMD. Your RMD (and of course any conversion in addition) will be taxable, but a later QCD would not be taxable if the QCD is extended.

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