Undo a T-IRA to R/O transfer??
Hello. Yesterday I arranged a direct transfer of a deductible (pre-tax) traditional IRA to a deductible (pre-tax) R/O IRA that I created 20 years ago using pre-tax 401k money. I am retired and will not return to work. Have I violated any IRS rules? Will this transfer be adverse to me in some way relative to taxes? In short, should I try to undo the transfer? Many thanks!
Permalink Submitted by Alan Spross on Fri, 2012-09-07 15:51
This should not be a problem, and violates no rules. It does not affect taxes in any way in your situation.
The only thing you have given up is the unlimited amount of protection for a rollover IRA were you to file bankruptcy. But even that would not be a factor if the value of your IRAs is less than one million dollars OR you live in a state that fully protects IRA assets. Most states do.