Consolidation of Contributory Roth and Roth Conversion
Can a client consolidate a contributory Roth and a Roth conversion account? Are there any special considerations if both are over 5 years old? Thank you!
Can a client consolidate a contributory Roth and a Roth conversion account? Are there any special considerations if both are over 5 years old? Thank you!
Permalink Submitted by Alan Spross on Fri, 2008-09-05 20:36
If both are over 5 years old, then the recharacterization deadline and the conversion holding period have both passed and there is no tax related reason not to consolidate them in one account, because they are already considered as one account for tax reasons as it is.
The one consideration that could apply would be if the conversion was funded totally by conversion of an employer plan rollover IRA. In that case, the Roth conversion would have no dollar limit for creditor protection in bankruptcy. Contributary accounts are limited to 1,000,000 plus inflation. If you live in a state that fully protects IRA accounts or if you never expect to have over 1mm in IRA assets, then this does not matter.