401k conversion
I have a self directed 401k and own real estate. I would like to convert to a ROTH IRA. The fair market value according to the county is what I think I should use for the conversion. After I move to the Roth IRA is there a waiting period before I can sell the property?
Permalink Submitted by Alan - IRA critic on Wed, 2016-10-05 00:18
Your 1099R for the conversion will be based on the IRA custodian’s valuation model. If you sell the property before the conversion or shortly thereafter in the same calendar year, the custodian will probably use the sale price. Otherwise, they may require an appraisal to determine the 1099R value. If you sell shortly after year end when the custodian must determine the year end value of that IRA, they would probably use the same value that they reported on your annual statement or 5498. There is no waiting period for selling the property, but if you recharacterize the conversion there is a waiting period to reconvert. Suggest you call the SD IRA Custodian and ask them in advance how they will value the property. You may also want to know if you could convert less than 100% of the property as well. Often you would want to keep the taxable income from a conversion from spilling over into a higher tax bracket, and with large conversions some portion may well be in a higher bracket.