What kind of transaction is involved in an IRA conversion?
When you convert some of a traditional IRA to a Roth, is there a sale of the traditional and then a purchase of the Roth? Or is there just a direct transfer, so the values remain the same? With the markets as they are, I wouldn’t want to take a chance on a sale and purchase.
Thoughts and/or advice? Thanks.
Permalink Submitted by Alan - IRA critic on Fri, 2020-03-13 02:11
Most Roth conversions are done by direct transfer to the Roth, usually at the same custodian. Investments are moved in kind to the Roth IRA. However, if a distribution is paid to the IRA owner, it is almost always in cash, and a 60 day rollover can then be done to the Roth IRA, and investments re purchased. In this situation you are out of the market with the distributed money, and in recent days that sounds pretty good, but in normal times it isn’t.