Roth and Roth Conversion IRA’s
Two of my clients have a Roth IRA and a Roth IRA Conversion account at Invesco.
I do not see why they say they cannot roll the conversion accounts into the plain Roth. The way it is now, thy have two sets of annual fees.
Would like your thoughts on this.
Permalink Submitted by Alan - IRA critic on Tue, 2017-04-25 23:58
They could combine the accounts if they wanted to, but I thought that most firms charged account fees based on the total balance at the firm, not per account. Benefits of combining are limited to the simplicity of having a single account, while the benefit of keeping conversions separate are that the amount of a recharacterization transfer back to a TIRA is obvious since it will be the account balance. If combined, an earnings calculation would be needed and the Roth owner would not know the amount of earnings unless they knew how to do the calculation before requesting the recharacterization. In addition, a very few people do multiple conversions with the intent of retaining only the best performer and recharacterizing the others, or similar stratagies for which keeping separate accounts would be the obvious choice. However, even if conversions are kept separate, there is no benefit for doing so after the recharacterization deadline. The separate account benefit is therefore limited to less than 2 years after which these separate accounts can be combined. In summary, whether accounts are combined or kept separate for a time depends on the individual situation and priorities of the IRA owner.