Combining Roth IRA w/ Roth Conversion IRA
Hello –
Client in their early 40s. Doesn’t anticipate needing retirement monies until 20 to 30 years.
Among other retirement accounts, client maintains:
1. A Roth Conversion IRA of around $39k – having been converted from a Trad. IRA in Dec., 2011.
2. A Roth IRA of $160k – consisting exclusively of contributions (and growth).
Question: Is there any reason why this client shouldn’t combine their Roth Conversion IRA (#1) into their Roth IRA (#2)?
Thank you!
Jason
Permalink Submitted by Alan - IRA critic on Wed, 2020-07-15 16:32
No reason to keep them separate. For tax purposes, all Roth IRAs are treated as one combined account. However, client still does need to keep track of their regular Roth contribution basis and their conversion basis in the event they take a non qualified distribution at some point.
Permalink Submitted by Jason Hochstadt on Fri, 2020-07-17 17:40
Hi Alan – Thanks for the reply. Understood. Just confirming that the conversion basis will be the sum that gets transferred into the Roth IRA (as opposed to the 2011 date the Roth IRA conversion had been made). Jason
Permalink Submitted by Alan - IRA critic on Fri, 2020-07-17 18:01
Yes, conversion basis is the gross amounts converted less any such amounts that were subsequently distributed.