Converstion of SEP IRA that owns property to ROTH
How can I convert the portion of my SEP that is the owner of a property. I already have a property that is owned 30% by my ROTH and 70% by my SEP. I’d like to convert all of the SEP portion either gradually or at once into ROTH. Can I just evaluate the fair market value and covert and declare that portion as my income. Do I need to do anything else.
I look forward to your replies
Permalink Submitted by Alan - IRA critic on Tue, 2015-03-17 15:40
Check with the self directed IRA custodian, who is responsible for determining the value of all IRA assets on 12/31 of each year. They would probably use that figure for the 1099R reporting the conversion. You will then need to re title the property solely to your Roth IRA as owner.
Permalink Submitted by Ron Moskola on Tue, 2015-03-17 23:23
Thank you very much. For opening a Check Book IRA account, I am thinking of creating an LLC in my state Florida. for SEP and another for ROTH. My question is how do I set up the tax ID to be SEP IRA or ROTH IRA with IRS. Can I just call IRS and let them know which account is SEP IRA and which is ROTH.I look forward to your infor4mative answer. Thanks so much
Permalink Submitted by Alan - IRA critic on Tue, 2015-03-17 23:58
Sorry, your self directed IRA custodian can help you with the entire process as they deal with self directed IRAs 24-7, and I do not. They will point out the risks of prohibited transactions, especially with real estate.
Permalink Submitted by Ron Moskola on Fri, 2015-03-20 04:07
Could you please let me know where in 1040 tax return would I put the amount of SEP to ROTH convertion for adding to my income and pay tax on it.Thanks so much, and I look forward to your reply.
Permalink Submitted by Alan - IRA critic on Fri, 2015-03-20 15:15
You would report a conversion on Form 8606, Parts I and II. Read the instructions at the start of Part I, as you may only need to complete Part II. Line 18 of Part II will show the amount that also goes on line 15b of Form 1040 and that figure is the amount of additional taxable income you will have.