Roth Conversion Question
I have a client that took a normal distribution from her IRA. She wants to roll it back into another IRA and then convert to Roth. How long does it need to be in the IRA before it can be converted to Roth?
I have a client that took a normal distribution from her IRA. She wants to roll it back into another IRA and then convert to Roth. How long does it need to be in the IRA before it can be converted to Roth?
Permalink Submitted by Alan Spross on Sat, 2012-01-07 20:55
She does not have to roll it back to another TIRA first. She can just write a check for the conversion amount to the Roth IRA custodian and she has done the conversion in a single step. Of course, this must be done within 60 days of receipt of the distribution and identify the contribution as a conversion, not a regular contribution.
If she rolls the distribution back to her TIRA first, she can also convert immediately thereafter but she will have used up her one permitted rollover from that IRA per 12 month period. If she just deposits the funds she has as a Roth conversion, she will not have used up the one rollover because a distribution converted to a Roth IRA does not count as a rollover for purposes of the 12 month limitation.
Permalink Submitted by James Flanagan on Mon, 2012-01-09 14:59
Thank you Alan. That is good news.