Planning for Possible Roth Recharacterization
I am 62. In 2009 and 2010 I converted several stocks from my traditional IRAs into three Roth IRA accounts (I’ll call these Roth accounts A, B & C). I would like to move my 2009-converted stocks into one account, e.g., C — and then do the same for my 2010-converted stocks after 10/15/2011 — so that accounts A & B will be “empty” and ready for new 2011 conversions. I plan to convert two stocks in 2011 — one into account A and the other into account B. I would prefer not to have to open two new Roth accounts to hold these 2011 conversions. Do you see any problems with this approach? Thank you in advance for your response.
Permalink Submitted by Alan Spross on Mon, 2011-07-11 18:33
There should be no problem with respect to various tax options regarding conversions. The fact that A and B had a balance shortly before new conversions were made to them would NOT affect the formula used to calculate earnings in the event you choose to recharacterize the new conversions. It’s a good plan for limiting the number of IRA account #s in your records.
I doubt there is any problem with your brokers account platform, but if there is they will let you know when you tell them what your intent is. Most brokers allow you to leave an account vacant for a reasonable period of time.