Conversion Roth / Regular Roth to a NEW Roth

Submitted by Kerry Schepers on Thu, 2019-06-13 19:25

client has two bank CD IRA Roths. One is labeled Conversion Roth, the other is a regular Roth. He is moving them both to a new regular Roth with American Funds. What reminders do I need with 5 year sit, and does the conversion Roth have it’s own set of five years? Will this time travel to the new Roth with American Funds? Thanks



Submitted by David Mertz on Thu, 2019-06-13 19:56

  • Roth conversion basis and the associated 5-year conversion clock belong to the individual, not to any particular Roth account of the individual.  Therefore, moving a Roth IRA doesn’t change anything.  There is no legal distinction between a “conversion” Roth IRA and a “regular” Roth IRA, both are simply Roth IRAs.
  • To avoid running afoul of the one-rollover-per-year rule, these IRAs cannot both be moved by distribution and rollover within 12 months of each other.  At least one, and preferably both, must be moved by nonreportable trustee-to-trustee transfer.

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