Roth Conversion SEP IRA
Hello. I have a client who is 63 and a farmer. He has more expenses than income this year, and wants to convert his IRA’s to Roths. He has a SEP IRA. Can he convert this, and make contributions to it in the future? Also, please remind me of conversion rules with distributions in the future. Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2018-11-15 16:00
Yes, a SEP IRA balance can be converted to a Roth (be sure there are no excess contributions in it), and then continue to receive either SEP or regular TIRA contributions. SInce client is over 59.5, he is no longer subject to the conversion 5 year holding period, so he could distribute any conversions from his Roth IRA without tax or penalty. However, for any earnings on the conversions to be tax free, 5 years must have passed from the year of his first Roth contribution of any type.