Permalink Submitted by Alan Spross on Wed, 2010-12-08 21:06
Knowing how banks operate these days, I think that most banks probably take the same position. Note that this is entirely a bank operating procedures issue and has nothing to do with the IRS.
Actually, all the bank would have to do is to re designate the TIRA CD as a Roth IRA CD, but their platform probably requires a new account number for the Roth. Alternatively, they could close the CD without penalty and reissue it for the unexpired term in a direct conversion transfer to the Roth IRA CD. All of these transactions come with a nominal processing cost that if the bank wanted to charge, it would be far less than 6 months of lost interest, even at today’s pitiful interest yields.
As it is, it may not make sense for your Dad to convert unless he is in a very low marginal tax bracket this year.
Permalink Submitted by Alan Spross on Wed, 2010-12-08 21:06
Knowing how banks operate these days, I think that most banks probably take the same position. Note that this is entirely a bank operating procedures issue and has nothing to do with the IRS.
Actually, all the bank would have to do is to re designate the TIRA CD as a Roth IRA CD, but their platform probably requires a new account number for the Roth. Alternatively, they could close the CD without penalty and reissue it for the unexpired term in a direct conversion transfer to the Roth IRA CD. All of these transactions come with a nominal processing cost that if the bank wanted to charge, it would be far less than 6 months of lost interest, even at today’s pitiful interest yields.
As it is, it may not make sense for your Dad to convert unless he is in a very low marginal tax bracket this year.