Roth IRA conversion error

Submitted by Annie Chu on Wed, 2023-07-05 06:36

Hello, I just found this forum and signed up as a new member, hoping someone can help advise me of a ROTH conversion error I just recently noticed.

Back in 2006, I converted my 401K from 2 previous jobs to a T Rowe Price ROTH Rollover IRA account. Paid taxes on it over a 6 year period that was allowed by the IRS at that time. Now I noticed that the account says “Rollover IRA” and not “Rollover ROTH IRA”. I’ll be calling TRP tomorrow but I’m not sure what fixes or what my options are to correct this.

It is my fault for not noticing it all these years but I’ve already paid taxes on it and the value of the account has grown so I don’t want to have to pay double the tax plus new taxes when I eventually have to withdraw for retirement.

Would appreciate any help and suggestions.



Submitted by David Mertz on Wed, 2023-07-05 11:55

  • Rollovers from a traditional 401(k) account directly to a Roth IRA were not permitted until 2008, so in 2006 there was no possible way to create an IRA account that would be named a “Roth Rollover IRA” with a rollover from a traditional 401(k) account.  Prior to 2006 the only option to roll a traditional 401(k) account over to an IRA was to roll the 401(k) over to a traditional IRA, generally to a conduit IRA called a “Rollover IRA.”  Rollover IRAs were so named because prior to 2004 rollovers back to an employer plan were permitted only from these Rollover IRAs, not from IRAs that had ever received other types of contributions.  Because rollovers from a Roth IRA to an employer plan have never been allowed, I doubt that any IRA custodian ever had an IRA account that they would have named a “Roth Rollover IRA.”
  • There has never been a provision in the tax code to permit the tax on one Roth conversion to be spread over six years.  A Roth conversion done in 1998 could be spread over 4 years, but that’s it.
  • Perhaps in 2006 you rolled the 401(k) over to this traditional Rollover IRA with the intent to do partial Roth conversions over six years but never did the conversion or you did do the conversions but you never converted the entire Rollover IRA to Roth.  It’s also possible that you filed incorrect tax returns over the 6-year period that somehow reported taxable Roth conversions for conversions that you never actually did.  (If the latter, there’s nothing you can do about that now.)
  • I suggest reviewing in detail the tax returns, Forms 1099-R and Forms 5498 for the years involved, if you still have them.

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