combining Roth’s
if I have a client who is in her early 60’s who has a Roth already for over 5 yrs and also has a traditional Ira, if we do a conversion on her traditional and then after converted combine the 2 Roth’s together would she then bypass the 5yr rule for the newly converted Roth
Permalink Submitted by Anonymous (not verified) on Mon, 2009-10-05 17:09
She is good to go already, as she is over 59 1/2. She just needs one five year tenure in any Roth, so combining them will not do any harm. All withdrawals are tax-free going forward and that immediately.
Unless…..she plans to recharacterize and wants to isolate losses from investments in the converted pool or wishes to somehow track the investments better.
pmk
Permalink Submitted by Jonathan Hammel on Mon, 2009-10-05 18:05
So she doesnt even have to combine her Roths…just as long as she has atleast one Roth over 5yrs she is good to go
Permalink Submitted by Alan Spross on Mon, 2009-10-05 20:43
Correct. Her Roths are fully qualified.
If she chooses to keep the current conversion in a separate account for recharacteriztion purposes, that account can be merged into the other Roth after the recharacterization deadline.
Without knowing the overall conversion plan, remember that if she waits 3 more months for a 2010 conversion, the income is not reportable until 2011 and 2012 if she chooses.