Adding Contribution to ROTH CONVERSION account
Client has a small account with me that is labeled ROTH CONVERSION. She converted funds over 10 years ago.
She wants to make a $7,000 2021 ROTH Contribution. Do I need to open a new ROTH IRA account? Or, can client add to existing ROTH account?
Permalink Submitted by Alan - IRA critic on Wed, 2022-03-30 19:20
Client could make the regular Roth contribution to the present account since Roth IRA basis tracking combines all owned Roth IRAs regardless of how titled as to contributions. Client needs make sure her basis tracking is up to date, at least until she reaches 59.5. If she has multiple Roth accounts, any NQ distribution she takes is treated as coming first from her regular contribution basis, then from conversions, oldest first, regardless of which account she actually take the distribution from. All we know from this post is that she will have a 7000 regular contribution, and at least one aged conversion of an unspecified amount. And there could be other Roth accounts. So she can contribute to your account, but then needs to get a handle on her Roth regular contribution basis total and her conversion basis total so she can correctly report any Roth distribution she takes before 59.5. She should also be keeping the Form 5498 she gets for each contribution she makes.