Pre-87 assets rollover (to a Roth IRA)
Good Morning
I am looking for assistance with the following situation:
FACTS:
client has 3 T-IRAs
T-IRA #1 has all pre-87 assets (previously rolled over from an employer plan)
T-IRA #2 has all post-86 assets (previously rolled over from an employer plan)
T-IRA #3 pretax assets
Questions:
Can the basis from T-IRA #1 (pre 87 dollars) be rolled directly to a Roth IRA without including assets in IRA #2 and #3? Or does the pro-rata rule apply?
I am aware the basis from pre-87 assets held in a qualified plan can be moved directly to a Roth IRA.
Thank you,
Brian
Permalink Submitted by Alan - IRA critic on Tue, 2013-08-13 17:55
Brian, once after tax contributions are rolled into a TIRA, they become subject to the pro rate rules and Form 8606. To avoid this, the pre 87 after tax contributions which can be distributed separately should be rolled directly to a Roth IRA as you indicated and not rolled to a TIRA.