Missed Roth Conversion
Hello, I have client who intended on doing a Roth conversion on 12/11/2019 and filled out the required paperwork and sent it in to my office. However, due to a mistake within my office the paperwork was misplaced and was just discovered over the weekend. I know we could still process the Roth conversion for 2020 but the client’s intension was to have the Roth conversion processed for 2019. Any thoughts or comments on how to address this issue?
Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2020-01-21 15:00
You will have to settle up with the client somehow. First, some estimate of how the delay affected the client’s financial situation. It is easy to determine the extra taxes client would have paid if the conversion had been done, but comparing that figure with what the conversion will cost this year may be more challenging. Another factor is how much the investments that would have been converted (or invested in) grew in the last 6 weeks since that growth would have been Roth growth. Other than a settlement of some sort directly with client, there is no way to actually back date the conversion itself or have client report conversion income in 2019 that will not be on their 1099R.