Roth conversion…after the fact?
A new client realizes she made quite the mistake. 6 months ago she closed out an IRA and deposited the check into a savings account. Seeing that it is way past the 60 days to do a rollover I am wondering if she can somehow convert it to a Roth IRA and at least salvage something good out of the situation.
So…can this be done or must that be done directly from an IRA to a Roth?
Sincerely,
pwbrooks
Permalink Submitted by Alan Spross on Tue, 2012-01-03 21:18
A Roth conversion does not have to be done by direct transfer, but if done by rollover the funds must be rolled to the Roth IRA within 60 days.
The IRS has allowed extension of the 60 day rollover period in certain circumstances if a private letter ruling is requested. The cost of a PLR for a rollover depends on the amount of the distribution, but legal costs to request the ruling must also be considered. If the amount is modest it is not worth the cost of the process. If she has a health related reason, the chances for IRS approval increase.