Trustee to Trustee conversions to a ROTH IRA

Submitted by Leo OConnor on Mon, 2013-01-28 18:20

Can a direct transfer be made from a traditional IRA at one custodian to a Roth IRA at another custodian? Or does the conversion have to occur at the same institution before a transfer can be made?

If a direct transfer cannot be made, can a distribution be taken from the tradional IRA and redeposited within 60 days into a Roth IRA as a conversion?



Submitted by Alan - IRA critic on Mon, 2013-01-28 19:33

The direct transfer can be done either before or after the conversion. If that is not convenient, a distribution can be taken from the TIRA account and rolled over within 60 days to a Roth IRA at the other custodian. This rollover does not count toward the one rollover limit since it would be a conversion.

Submitted by Leo OConnor on Wed, 2013-01-30 23:41

Schwab, Fidelity, and BNY Melon are givng me a different answer. They won’t allow me to make this un-like kind transfer without the conversion occuring first.  My next choice was to make a distribution from the traditional IRA and use a 60 day rollover to complete the conversion, but I am told the new custodian won’t accept the funds.Is there a source I can refer to for the answer provided on this forum?

Submitted by Alan - IRA critic on Thu, 2013-01-31 00:01

  1. See p 66-67 of Pub 590 for all 3 Roth conversion methods and p 68 for analagous transfers from an employer plan to a Roth IRA:   http://www.irs.gov/pub/irs-pdf/p590.pdf . That’s not to say that an IRA custodian is obligated to offer a transaction just because it is perfectly acceptable to the IRS. But there is no denying your right to take a distribution and rolling it over yourself, but take a copy of your statement with you when you report the contribution as a conversion rather than a regular contribution.
  2. Are you trying to originate the conversion through the receiving custodian?

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